Massachusetts Turnpike Authority v. Perini Corp.

• Decision Date: 28 June 1965
• Citation: 349 Mass. 448,208 N.E.2d 807
• Parties: MASSACHUSETTS TURNPIKE AUTHORITY v. PERINI CORPORATION et al. 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 807

208 N.E.2d 807

349 Mass. 448

MASSACHUSETTS TURNPIKE AUTHORITY v. PERINI CORPORATION et al. ¹

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 5, 1965.

Decided June 28, 1965.

Walter Powers, Boston (Daniel Needham and Walter White, Boston, with him), for plaintiff.

Philander S. Ratzkoff, Boston (Roger B. Coulter, Boston, with him), for defendants.

Before WILKINS, C. J., and WHITTEMORE, CUTTER, KIRK and REARDON, JJ.

CUTTER, Justice.

The authority's bill in equity seeks declaratory relief against Perini Corporation (Perini) and also against an insurance company (the insurer, see fn. 1) which had issued to Perini a comprehensive liability insurance policy. The policy named Perini as insured and the authority and the trustee (fn. 1) as additional insureds. A judge of the Superior Court, without making any decision, reserved the case for the determination of this court upon the pleadings and a case stated.

In 1959, the authority (acting under St. 1958, c. 598) made a contract with Perini (drafted by the authority) to construct an additional traffic tunnel (now known as the Lieutenant Callahan Tunnel) under Boston harbor, to modernize the existing Sumner Tunnel, and to combine the two tunnels as a single project. The contract (art. 26) provided that Perini 'shall indemnify and save harmless the [a]uthority and * * * its officers, * * * and employees against all suits, claims or liability of every name and nature, for or on account of any injuries to persons or damage to property arising out of of or in consequence of the acts of * * * [Perini] in the performance ance of the work covered by the contract and/or [sic] failure to comply with * * * [its] terms * * * whether by himself or his employees or sub-contractors, but only in respect of such injuries or damages sustained * * * prior to the completion and acceptance of the work * * * [emphasis supplied in the original exhibit].' Certain other relevant contract provisions are summarized in the margin. ²

The insurer issued the comprehensive liability insurance policy mentioned above. As amended, the relevant coverage (insuring agreement 1, coverage D, property damage liability) read. 'To pay on behalf of the [i]nsured all sums which the [i]nsured shall become legally obligated to pay as damages for: (a) [p]hysical injury to or destruction of tangible property, or (b) [l]oss of use of such tangible property, provided the physical injury thereto was caused by accident.' ³ The policy also required the insurer to 'defend any suit * * * against the insured alleging such * * * injury or destruction and seeking damages which are payable under * * * this policy, even if such suit is groundless * * *.'

The authority 'acquired by formal eminent domain takings all property and rights deemed by it essential for the construction,' thus making available to Perini 'those areas and rights deemed essential for the prosecution of the work under the contract. In respect of each case or claim which is the subject matter of controversy * * * such areas and rights had been so made available to * * * [Perini] prior to the occurrence of any alleged damage to the affected property in each such case or claim. The work * * * at the time of the bringing of this bill * * * had not been completed, nor accepted by the Authority.'

During the performance of the contract, 'property of landowners was physically injured or destroyed, and in some cases rights of access were impaired. As a result of the takings made and of the alleged injury to or destruction of such property or of impairment of access to such property * * * forth-four owners initiated petitions against the [a]uthority' under G.L. c. 79. See St.1958, c. 598, § 15. The authority in each instance has called on Perini and the insurer to defend the proceeding and to save the authority harmless against the claim. Because Perini and the insurer have declined to defend these cases, the authority has paid (1) the legal expenses in connection with (a) the claims which have been tried and (b) the preparation of other cases, and (2) all judgments against it.

The authority contends (1) that Perini and the insurer 'are bound * * * jointly and severally, to indemnify it for all judgments * * * for damages, other than for takings by eminent domain, caused to property in the course of the construction,' and (2) that the insurer 'is bound to defend against all petitions heretofore brought against the [a]uthority for [such] damages.' Perini and the insurer contend (1) that the contractor has no obligation under the contract with the authority either to defend petitions brought against the authority under G.L. c. 79, ⁴ or to indemnify the authority against any judgments recovered upon such petitions, and (2) that the insurer has no such obligation under its policy naming the authority as an additional insured.

1. Contract and insurance policy provisions much like those here discussed have been the subject of earlier decisions. Like other contracts of indemnity, such provisions are to be * * * reasonably construed' in accordance with the parties' intention, with reference to the parties' situation when the provisions were negotiated, and in a manner 'to effectuate the purpose sought to be accomplished.' See New York, N. H. & H. R. R. v. Walworth Co., 340 Mass. 1, 3, 162 N.E.2d 789, 791.

Bryne v. City of Gloucester, 297 Mass. 156, 8 N.E.2d 170, dealt with a situation in many respects similar to that now before us. A contractor agreed with a city to construct a tunnel under certain buildings and (p. 157, 8 N.E.2d p. 171) to indemnify it against claims 'by reason of any act, omission or neglect of the * * * [c]ontractor * * * in carrying on the work.' The contractor performed the work with extreme care and with no negligence. Any damage to the buildings was caused by necessary blasting operations and was inevitable. The city, when it acquired an easement under the buildings, had agreed to restore the buildings in the event of inevitable damage. The trial judge ruled (p. 158, 8 N.E.2d p. 171) that the word 'act' in the contract meant only improper or negligent acts, and that the contractor's obligation to indemnify did not extend to loss which was inevitable by reason of the construction. This court took essentially the same view. It construed the contract 'with reference to the situation of the parties when they made it and to the objects sought to be accomplished.' It noted (p. 159, 8 N.E.2d p. 171) that the parties to the construction contract 'must have expected that the city would acquire the necessary rights' in private land, and pointed out that, if the city had acquired the easement by eminent domain, it would have acquired 'the right to do all things necessary to complete the work, including the right to inflict 'inevitable' damage,' with the consequence that the landowners would have acquired, immediately upon the taking 'valid claims against the city for all damages, including such [inevitable] injury to the buildings.' The court declined (pp. 160-161, 8 N.E.2d p. 171) to hold that the building owners' claims for inevitable damages arose by reason of any act, omission, or neglect of the contractor as those words were used in the indemnity provision. Cf. Murray Realty, Inc. v. Berke Moore Co. Inc., 342 Mass. 689, 692-693, 175 N.E.2d 366 (where the damage was not found to be necessary or inevitable).

In Holbrook v. Massachusetts Turnpike Authy., 338 Mass. 218, 154 N.E.2d 605, it was held that an owner, part of whose land had been taken, might recover under St. 1952, c. 354, § 15, and G.L. c. 79, §§ 10 (see fn. 4) and 12, for 'special and peculiar' injury subsequently caused to the remainder of his land as a necessary consequence (p. 224, 154 N.E.2d 605) of construction work. The court pointed out (p. 222, 154 N.E.2d p. 608) that the Legislature may permit recovery of damages beyond what 'the landowner * * * [was] entitled to receive as a matter of constitutional right,' and said (p. 223, 154 N.E.2d p. 608) that the court then was 'not dealing with a statute [the 1952 statute] which imposes liability only where a taking is involved.' At p. 224, 154 N.E.2d at p. 609 it was said, 'If, due to the performance of the work as authorized, the [then] petitioner's property suffered injuries * * * such damage could be found to have occurred while 'carrying out the powers' or 'by the exercise of any of the powers' conferred by [St.1952] c. 354, and to be a necessary consequence of doing the authorized work at that time. In this respect it is immaterial that the work was performed by a contractor.' The court stated (pp. 224-226, 154 N.E.2d p. 610) that there could not be recovery under St.1952, c. 354, § 15 (and G.L. c. 79), 'for damages due to negligence or to other unauthorized acts or omissions in carrying out work under' the 1952 statute. The relevant provisions of § 15 of the 1958 statute (fn. 4) appear identical With those of § 15 of the 1952 statute considered in the Holbrook case.

These decisions largely control the present case. The contract between Perini and the authority, and the policy issued by the insurer, each must be given a sensible, practical construction in the light of these decisions. See United Shoe Mach. Corp. v. Gale Shoe Mfg. Co., 314 Mass. 142, 148, 49 N.E.2d 913; Connecticut Indem. Co. v. Lee, 74 F.Supp. 353, 359 (D.Mass.) affd. 168 F.2d 420 (1st Cir.).

2. We hold, following the Bryne case, that the parties intended by art. 26 (and also the somewhat related provisions of art. 25, fn. 2) of the contract between Perini and the authority to require Perini to indemnify the authority only from claims for Perini's acts and omissions causing damage other than damage attributable to a taking or 'inevitable' in carrying out the work. In essence, this means that Perini will be liable only if its acts or omissions were tortious by reason of negligence or strict liability, maintaining a nuisance,...