American Insurance Co. v. Siena Construction Corp., 034929
| Decision Date | 09 October 2007 |
| Docket Number | 034929 |
| Citation | 2007 MBA 434 |
| Parties | American Insurance Company, as subrogee for Lyme Properties, Inc. v. Siena Construction Corp. et al. |
| Court | Massachusetts Superior Court |
Other Parties: Great Northern Insurance Co., as subrogee of Microbia, Inc. v. Siena Construction Corp. et al.
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Billings, Thomas P., J.
For the reasons that follow, the motion of the plaintiffs to strike the jury demands of the defendants are DENIED.
These cases, consolidated now for all purposes, arise out of an explosion on July 15, 2002 at 320 Bent Street, Cambridge. 320 Bent Street was a new building, then in the final stages of construction, owned by Lyme Properties, Inc., whose subrogee American Insurance Company ("AIC") is the plaintiff in No. 03-4929. The space in which the explosion occurred was being readied for occupancy by Microbia, Inc., whose subrogee Great Northern Insurance Company is the plaintiff in No 04-618.
In both cases the plaintiffs seek to recover for property damage against:
Siena Construction Corp., the general contractor;
Minus Eleven, Inc., a subcontractor of Siena;
American Plumbing and Heating Corp., a subcontractor of Siena;
Associated Mechanical Services, Inc., a subcontractor of Siena (in No. 04-618 only);
Fred Williams, Inc., a subcontractor of Siena (in No. 03-4929 only);
Arrowstreet, Inc., the project's architect under contract with the Owner; and
AHA Consulting Engineers, Inc., which contracted with Arrowstreet to provide engineering services related to the project design.[1]
AIC's complaint in No. 03-4929 asserts claims for breach of contract, breach of warranty (express and implied), negligence (garden-variety and gross), "violation of safety, industry and building codes," and violation of G.L.c. 93A. Great Northern's complaint in No. 04-618 pleads nine counts of straight negligence.
AIC filed a Motion to Strike Jury Demand, contending that no claim in its complaint is triable to a jury. Great Northern indicated at the hearing on September 20, 2007 that it wished to join in AIC's motion. All defendants oppose.
Were this solely a controversy between AIC as the Owner's subrogee, and its general contractor (Siena) and subcontractors, the action could be tried jury waived (or, under Mass.R.Civ.P. 39(c), by framing issues of fact to be tried to a jury).
As is typical for a large construction project, the contract documents were prepared using the AIA forms, with some customization. Article 7.1.1.1 of the General Conditions entitled "GOVERNING LAW; WAIVER OF JURY TRIAL":
In any claim arising under or related to the Contract, the parties WAIVE TRIAL BY JURY, consent to trial of the claim by a judge only (or to a judge upon reference to a master who makes final fact findings) and agree that such claim shall be brought in the Superior Court Department of the Massachusetts Trial Court for the county in which the project is located.
Such a contractual waiver of trial by jury is enforceable. Chase Commercial Corp. v. Owen, 32 Mass.App.Ct. 248, 251-52 (1992).
The General Conditions were expressly incorporated in to the general contract by Article 1.1 thereof, and Article III.1 of each subcontract stated, "The Contractor and Subcontractor agree to be bound by the terms and conditions of the General Contract Documents referred to in Article I." This is the sort of "clearly stated general reference" that "will suffice" to incorporate the General Conditions into the prime contract and the subcontracts, respectively. Chicopee Concrete Service, Inc. v. Hart Engineering Co., 398 Mass. 476, 478 (1986); see Sciaba Construction Corporation v. Frank Bean, Inc., 43 Mass.App.Ct. 66, 68 (1997).
No Massachusetts case specifically considers whether a subcontract's incorporation by reference of the general contract documents embraces a jury waiver contained therein. Cases from other jurisdictions have addressed this question as applied to arbitration clauses (which, of course, necessarily include a waiver of the right to jury trial). Generally speaking, those cases have ordered arbitration where the subcontract's incorporation language is as broad as that in the subcontracts in this case,[2] and have declined it where the incorporation language is narrow (e.g., pertaining only to the scope of work).[3]
I have no reason to suspect that the Massachusetts appellate courts would see it differently. Given the breadth of the incorporation language at issue here, the jury waiver in the General Conditions is enforceable against the subcontractors in their disputes with the Owner's subrogee AIC.
Finally, the defendants' contention that the waiver does not cover tort claims such as those asserted here reflects an unduly circumscribed view of the contract language. The phrase, "arising under or related to the contract" denotes comprehensiveness, and "must be read broadly." Commonwealth v. Philip Morris, Inc., 448 Mass. 836, 846 (2007). Since every claim between the plaintiffs and the general and sub-contractors, whatever the legal theory, pertains to work performed under the general contract or a subcontract, all are embraced by the contractual jury waiver.
The same cannot be said, however, of AIC's claims against Arrowstreet and AHA. The Owner and Arrowstreet signed a contract for architectural services which included neither a jury waiver, nor an express incorporation of the general contract or the General Conditions. The only mention of either is in Article 1.1.5:
Services under this Agreement include contract administration services, in accordance with the General Conditions of the Contract for Construction attached hereto... Modifications to the General Conditions that materially affect the duties, obligations, or responsibilities of the Architect under this Agreement shall be subject to the architect's approval, which approval shall not be unreasonably withheld, conditioned or delayed.
Section 2 of the General Conditions addresses, generally speaking, the Architect's duties during the construction process - issuance of additional drawings, rejection of nonconforming work, and review of shop drawings, product data and samples. In thus referring to the General Conditions, Article 1.1.5 of the Arrowstreet contract clearly means to reference this description of the project administration services that the architect agreed to provide.
In other words, "the incorporation was only of those terms of the general contract that were relevant to the work to be performed by" the architect. Chicopee Concrete, 398 Mass. at 478; compare the cases cited in note 3, supra. Nothing in the contract suggests an intention that the General Conditions as a whole, or the jury waiver in particular, were to become part of that Agreement. Surely, the waiver of an important constitutional right must be clearer than this. See Aetna Ins. Co. v. Kennedy, 301 U.S. 389, 393 (1937) (); and contrast Chase Commercial Corp. v. Owen, 32 Mass.App.Ct. at 251-54 ().
A similar flaw infects AIC's other argument, based on Article 1.2.4.4 of the Arrowstreet contract. This provided:
In the event of any legal proceeding between the Owner and any third party arising out of or relating to the Project, the Architect agrees to be joined in any such proceeding and to permit the consolidation of any such proceeding with any such proceeding between the Architect and Owner under this Agreement, provided that (a) there is one or more common questions of law or fact involving the Architect and the Owner or such third party, and (b) the Architect's presence is reasonably required to afford complete relief to the Owner or to avoid inconsistent outcomes affecting the Owner.
AIC argues that by consenting to join claims by or against it with claims by or against others who have waived their right to trial by jury, Arrowstreet likewise has waived its jury right.
Nothing in Article 1.2.4.4 expressly waives, or even refers to, the right to trial by jury. To imply such a waiver from this language would be to read a great deal more into the contract language than the parties likely intended, and would turn on its head the traditional presumption against waiver (see above).
Finally, the consulting engineer on the project, AHA Consulting Services, had no agreement whatever with the Owner. AIC does not contend that AHA waived a jury in its agreement with Arrowstreet, but argues that it should nonetheless be deprived of one "for reasons of judicial economy," or else severed from the case.
Though this Court and others hold judicial economy in high esteem, it does not trump either the Massachusetts or the United States Constitution. Both Arrowstreet and AHA seasonably claimed trial by jury in this proceeding. At least insofar as the design defendants are concerned, therefore, Civil Action No. 03-4929 must be tried to a jury. Moreover, because the issues and evidence appear to overlap substantially as between the claims against the design defendants and those against the contractor-subcontractor defendants - and because those claims, too, must be tried to a jury for reasons set forth below - severance would cost much and accomplish nothing.
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