Md. Cas. Co. v. NSTAR Elec. Co.

• Decision Date: 14 May 2015
• Docket Number: SJC–11741.
• Citation: 30 N.E.3d 105,471 Mass. 416
• Parties: MARYLAND CASUALTY COMPANY & another v. NSTAR ELECTRIC COMPANY & another.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

471 Mass. 416

30 N.E.3d 105

MARYLAND CASUALTY COMPANY¹ & another²

v.NSTAR ELECTRIC COMPANY & another.³

SJC–11741.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Jan. 5, 2015.

Decided May 14, 2015.

Matthew M. O'Leary (Andrew J. Fay with him), Boston, for the plaintiffs.

Andrea Peraner–Sweet (Barbara L. Drury with her), Boston, for the defendants.

Present: GANTS, C.J., SPINA, CORDY, BOTSFORD, DUFFLY, LENK, & HINES, JJ.

Opinion

LENK, J.

This case raises the question whether a tariff filed with and approved by the Department of Public Utilities (DPU) may

limit a public utility from liability to nonresidential customers for special, indirect, or consequential damages resulting from the utility's gross negligence. We hold that a properly approved tariff may so limit a public utility's liability.

1. Background. On December 8, 2006, two employees of NSTAR Electric and Gas were performing a switching procedure to restore electrical equipment that had been taken out of service. During the procedure, an explosion occurred, igniting a fire in the basement of a building at One Broadway in Cambridge. Smoke filled the basement and flowed into the stairwells leading up to the other floors of the building. The fire and smoke resulted in extensive damage to the building, requiring its closure for approximately six weeks. Construction and repairs continued for a lengthy period of time thereafter.

At the time of the fire, the building was owned by the Massachusetts Institute of Technology (MIT). MIT leased space in the building to Cambridge Incubator, Inc. (Cambridge Incubator),⁴ Sedo.com, LLC (Sedo), and Allodia Corporation (Allodia). Cambridge Incubator and Sedo purchased insurance coverage from Maryland Casualty Corporation (Maryland Casualty); Allodia purchased insurance coverage from Assurance Company of America (Assurance). In the wake of the fire, Maryland Casualty paid claims by Cambridge Incubator and Sedo, and Assurance paid claims by Allodia.

Maryland Casualty and Assurance then brought this complaint against NSTAR Electric Company and NSTAR Electric & Gas Company (collectively, NSTAR), seeking to recover for the claims paid to Cambridge Incubator, Sedo, and Allodia. The plaintiffs asserted causes of action in negligence, gross negligence or reckless, wilful and wanton misconduct, breach of contract, and breach of express and implied warranties. They alleged that the explosion resulted from NSTAR's inadequate maintenance of its equipment at the building and training of the crew performing the switching procedure.

NSTAR moved for partial summary judgment. It contended that, to the extent to which the insurers sought recovery for business interruption losses, their claims were barred as a matter of law by Massachusetts Department of Telecommunications and Energy Tariff No. 200A (tariff), filed with and approved by the DPU on January 31, 2006, and in effect when the explosion

occurred in December, 2006. The tariff contained a “Limitation of Liability” clause providing that, “for non-residential Customers served under general service rates, the Company shall not be liable in contract, in tort (including negligence and [G.L. c.] 93A), strict liability or otherwise for any special, indirect, or consequential damages....”

A judge of the Superior Court allowed, in part, NSTAR's motion for summary judgment. The judge determined that, while private parties may not contractually limit their liability for gross negligence, a tariff filed with and approved by a regulatory agency may so limit a public utility's liability. Because the claims paid to Allodia and Sedo that the plaintiffs sought to recover were exclusively for business interruption, the judge determined that they were fully precluded by the “Limitation of Liability” clause. By contrast, the judge concluded that, to the extent Maryland Casualty sought to recover for claims paid to Cambridge Incubator for property damage, its claims were not for “special, indirect or consequential damages,” and thus were not barred by the tariff.

In the wake of the judge's decision, the parties filed a stipulated judgment awarding Maryland Casualty the amount of $17,062 plus interest for claims paid to Cambridge Incubator for property damage. The plaintiffs then appealed from the decision granting partial summary judgment, and we transferred the case to this court on our own motion.

2. Discussion. On appeal, the plaintiffs assert that the judge improperly granted partial summary judgment because: (1) there is a genuine dispute regarding the authenticity of the tariff; (2) the language at issue in the tariff does not clearly and unambiguously preclude liability for claims based on gross negligence or wilful and wanton misconduct; and (3) NSTAR cannot limit its liability for losses caused by its own gross negligence or wilful and wanton misconduct.⁵ We conclude that the tariff is authentic, that the clause at issue does encompass claims based on gross negligence or wilful and wanton misconduct, and that the clause is

enforceable.⁶

a. Authenticity of the tariff. General Laws c. 25, § 1, provides that the DPU “shall have an official seal, which shall be judicially noticed.” The judge based his decision granting summary judgment on the copy of the tariff submitted to the Superior Court by NSTAR and accompanied by a cover letter that contained the DPU's official seal. The cover letter attests that “the attached are true and certified copies of NSTAR Electric Company/Cambridge Electric Company Terms and Conditions for Distribution Services Tariffs ... on file with the Rates and Revenue Requirements Division of this Agency and also a copy of the Stamp Approval dated January 31, 2006 of the compliance filing....”

The plaintiffs contend that the judge erred in granting summary judgment to NSTAR because there is a genuine and material factual dispute as to the authenticity of the tariff at issue. The plaintiffs' challenge to the tariff's authenticity focuses on discrepancies between the copy of the tariff that accompanied NSTAR's motion for summary judgment and the copy of the tariff later submitted to the court with the cover letter from the DPU. We conclude that these alleged discrepancies, which involve minor differences in the pagination of the documents, do not give rise to a “genuine issue” regarding the authenticity of the tariff accompanied by the DPU's official seal. See DIRECTV, LLC v. Department of Revenue, 470 Mass. 647, 657–658 (2015), citing HipSaver, Inc. v. Kiel, 464 Mass. 517, 522, 984 N.E.2d 755 (2013) (no genuine issue of material fact where party has “no reasonable expectation” of prevailing on factual dispute). See also Mass. R. Civ. P. 56(c), as amended, 436 Mass. 1404 (2002).

b. Interpretation of the “Limitation of Liability” clause. The tariff's “Limitation of Liability” clause provides, in full:

“Unless there is negligence on the part of the Company, the Company shall not be liable for damage to the person or property of the Customer or any other persons resulting from the use of electricity or the presence of the Company's appliances and equipment on the Customer's premises. In any event, for non-residential Customers served under general service rates, the Company shall not be liable in contract, in tort (including negligence and [G.L. c.] 93A), strict liability or otherwise for any special, indirect, or consequential damages whatsoever including, but not limited to, loss of profits or revenue, loss of use of equipment, cost of capital, cost of temporary equipment, overtime, business interruption, spoilage of goods, claims of Customers of the Customer or other economic harm.”

This court has observed that, “where words in a tariff are used in a peculiar or technical sense, and where extrinsic evidence is necessary to determine their meaning or proper application, so that ‘the enquiry is essentially one of fact and of discretion in technical matters,’ then the issue of tariff application must first go to the [regulatory] [c]ommission.” Spence v. Boston Edison Co., 390 Mass. 604, 613, 459 N.E.2d 80 (1983), quoting United States v. Western Pac. R.R., 352 U.S. 59, 66, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956). The interpretive question at issue in this case, however, does not turn on any technical term. Instead, it concerns the meaning and scope of a tariff provision specifying the types of damages for which NSTAR may be held liable. Because the interpretation of such a provision poses a pure question of law, it is proper for judicial resolution. See Patterson v. Christ Church in the City of Boston, 85 Mass.App.Ct. 157, 159 (2014).

We have little difficulty concluding that the portion of the “Limitation of Liability” clause at issue here encompasses a claim of gross negligence or wilful and wanton misconduct. The clause refers to liability “in tort.” A cause of action for gross negligence or wilful and wanton misconduct is a form of liability “in tort.”

MacFadyen v. Maki, 70 Mass.App.Ct. 618, 621–623, 876 N.E.2d 437 (2007) ; 1 D.B. Dobbs, P.T. Hayden, & E.M. Bublick, Torts § 140 (2d ed. 2011); Restatement (Second) of Torts § 500 (1965).

The plaintiffs assert that the clause's parenthetical phrase—“(including negligence and [G.L. c.] 93A)”—indicates that “[t]he only ‘tort’ liability [the clause] purports to limit is that for ‘negligence and [G.L. c.] 93A.’ ” “It is,” however, “hornbook law that the use of the word ‘including’ indicates that the specified list ... that follows is illustrative, not exclusive.” Puerto Rico Maritime Shipping Auth. v. Interstate Commerce Comm'n, 645 F.2d 1102, 1112 n. 26 (D.C.Cir.1981). The tariff's “use of the word ‘including’ indicates that the [parenthetical] list is representative, not all-inclusive, and that any ... tort is covered” by the clause. See Barrows v. Wareham Fire Dist., 82 Mass.App.Ct. 623, 626, 976 N.E.2d 830 (2012).

In context, the specific reference to “negligence” in the parenthetical serves to clarify the relation between the ...