Melrose Housing Authority v. New Hampshire Ins. Co.

• Decision Date: 01 July 1987
• Citation: 507 N.E.2d 787,24 Mass.App.Ct. 207
• Parties: MELROSE HOUSING AUTHORITY v. NEW HAMPSHIRE INSURANCE COMPANY.
• Court: Appeals Court of Massachusetts

Page 787

507 N.E.2d 787

24 Mass.App.Ct. 207

MELROSE HOUSING AUTHORITY v. NEW HAMPSHIRE INSURANCE COMPANY.

Appeals Court of Massachusetts Middlesex.

Argued March 9, 1987.

Decided May 21, 1987.

Further Appellate Review Granted July 1, 1987.

Terrance J. Hamilton (Stephen M. Perry, Boston, with him) for defendant.

Jerry E. Benezra (Gerald C.J. Cook, Melrose, with him) for plaintiff.

Before GREANEY, C.J., and CUTTER and KASS, JJ.

GREANEY, Chief Justice.

This is an appeal by the defendant from a judgment of the Superior Court entered after adoption of a master's report (facts final). The judgment assessed damages against the defendant in the amount of $1,007,500.36, the apparent cost of repairing and reconstructing part of a housing project for the elderly in Melrose. We reverse the judgment.

The project in question was built by Varrasso Brothers, Inc. (Varrasso), and substantially completed in April, 1971. It was accepted by the architect and the plaintiff and thereafter occupied. Some time in 1978, cracking, buckling, and other failures were discovered in the exterior brick cavity wall of the building. Investigation of the problem by experts retained by the plaintiff led to reconstruction of the wall and other corrective work. The plaintiff commenced this action against the defendant as Varrasso's surety ¹ on June 9, 1981, and the case was tried to the master solely on the claim of breach of the construction contract. ²

The building was designed and built with a cavity wall; that is a wall consisting of an interior structural wall and an exterior nonstructural wall, with an air space in between. A change in the plans and specifications, apparently requested by the plaintiff, altered the face material of the exterior wall from concrete block to brick. The exterior brick wall was attached to the interior concrete wall in the following manner: Wedge inserts were precast into each of the horizontal concrete spandrel beams, thereby becoming integral parts of the load-bearing interior wall. Courses of bricks were laid working up to an interior spandrel beam. Pressure-relieving angle irons were bolted to the inserts in the interior spandrel beam by means of V-bolts (bolts with V-shaped heads) that had been fitted into each wedge. Flashing, as called for by the specifications, was then placed over the angle irons. This process was continued until the roof cant was reached. Despite the change from concrete block to brick, no revision was made in the original working plans and specifications for the installation of the wedges, V-bolts, and angle irons.

The master concluded that "[t]he cracking, buckling and other failures of the exterior brick facade of [the] project were caused by [Varrasso's] improper installation of pressure relieving angle irons and the omission of pressure relieving angle irons where called for and poor workmanship in the masonry sections of the construction." In support of this conclusion, the master found that in the nine areas of the wall that had been opened and investigated: (a) the pressure-relieving angle irons did not extend to the corners of the buildings as required by the original plans; (b) in other cases, the V-bolts which were to hold the angle irons had been improperly installed, that is, "some bolts holding the angles were only finger-tight; some were missing and in one case there was an angle with the bolt on the angle never having been installed"; (c) flashing (which was designed to carry water out of the cavity wall) in several locations had "not [been] extended out to the angle iron and in some locations the flashing was completely missing"; (d) there was poor bonding between the bricks and mortar because the masons had allowed the mortar to stiffen prematurely before applying it; and (e) the masons had improperly used their mortar boards, allowing excess mortar to drop into the wall cavity and plug the weep holes. These deficiencies were characterized by the master as a lack of "[g]ood workmanship." In his view, they also established contract violations. ³

We pass the question whether the action should be barred by § 7B of the general conditions of the contract, which is entitled "General Guaranty" and which imposes a one-year limitation after final acceptance on claims against the contractor or its surety for defects in the work. Although this provision is alluded to by the master in his report, ⁴ the defendant has not briefed its possible application. As a result, the issue is deemed waived. Mass.R.A.P. 16(a)(4), 367 Mass. 921 (1975). Except for the general observations in the margin, we also pass the difficult question whether the action should be barred by the statute of repose contained in G.L. c. 260, § 2B. ⁵ We conclude that the claim is barred by the six-year limitations period for contract actions set forth in G.L. c. 260, § 2, which had expired before the action was commenced. ⁶

The general rule is that a cause of action for breach of contract accrues at the time of the breach. Campanella & Cardi Constr. Co. v. Commonwealth, 351 Mass. 184, 185, 217 N.E.2d 925 (1966). "However, there are situations in which a cause of action in ... contract ... which is based on an inherently unknowable wrong may not accrue until the person injured knows or in the exercise of reasonable diligence should know the facts giving rise to the cause of action." Frank Cooke, Inc. v. Hurwitz, 10 Mass.App.Ct. 99, 106, 406 N.E.2d 678 (1980). This is the so-called discovery rule. The discovery rule in contract actions thus far has been applied to cases of professional malpractice (which can sound in either contract or tort) where an ordinary layperson would not be expected to recognize a professional failure as a breach of the contract. See the discussion of authorities in Anthony's Pier Four, Inc. v. Crandall Dry Dock Engineers, Inc., 396 Mass. 818, 824-826, 489 N.E.2d 172 (1986), where the discovery rule was applied to express warranty claims brought against professionals in the marine design and marine engineering fields. The parties in this case, however, have proceeded on the assumption that the discovery rule applies to an owner's claim against a contractor for breach of a construction contract, and the master decided the case on that basis. We accept the case for decision in this posture.

To toll the running of the statute of limitations, it would have to appear that the plaintiff's claim was "inherently unknowable," namely, that the defects by their very nature could not have been discovered through the exercise of reasonable diligence, including careful physical inspection when and where necessary or appropriate. See Graveline v. BayBank Valley Trust Co., 19 Mass.App.Ct. 253, 254, 473 N.E.2d 700 (1985). Put another way, it is a "state of 'blameless ignorance' which tolls the statute of limitations." Gore v. Daniel O'Connell's Sons, 17 Mass.App.Ct. 645, 648, 461 N.E.2d 256 (1984), quoting from Urie v. Thompson, 337 U.S. 163, 170, 69 S.Ct. 1018, 1025, 93 L.Ed. 1282 (1949). See also White v. Peabody Constr. Co., 386 Mass. 121, 130, 434 N.E.2d 1015 (1982).

The plaintiff's claim of inherent unknowability rests principally on the fact that the pressure-relieving angle irons, wedge inserts, and flashing were eventually concealed from view during the normal course of construction of the exterior wall, just as the plans and specifications required. The plaintiff's expert thought this created, as he put it, a "classic hidden defect," ⁷ which could have been detected only by the mason subcontractor. The master in substance so found, by concluding that the plaintiff had no reason to notice a problem until 1978, when cracks, buckling, and other failures in the wall began to manifest themselves. But on a project of this magnitude, an owner cannot help but be aware that a great deal of work will be permanently obstructed from view in the course of construction. It follows that examination of work which is to be concealed must be done if the integrity of the project is to be safeguarded. In order to protect an owner's interests in this regard, commercial construction contracts of this type provide that the owner's representatives, the architect, the clerk of the works, and their agents and employees in the field have the right to inspect all phases and details of the work before it is covered up. Sloppy workmanship and defective materials can be rejected or ordered to be corrected. The contract in this case contained such provisions, and the additional provision that "[i]f any work be covered up without approval or consent of the [a]rchitect or the [plaintiff], it must, if requested by [either of them] be uncovered at the expense of the [c]ontractor." There are also other broad provisions in the contract, the fair import of which ensures that all the work can be inspected and tested "at any time before final acceptance of the entire work." The plaintiff's interests were to be protected by the architect (and his staff) and the clerk of the works. ⁸ Each of these possessed the expert skills necessary to examine the performance of the contractor and the subcontractors. The rights conferred on the plaintiff by the contract (as outlined above) imposed a concomitant duty on those experts to supervise performance of the work closely.

The master found specifically that the conditions as to missing and improperly installed angle irons, wedge inserts, and flashing were "inherently unknowable." The reasoning in his report appears to identify these defects as the major faults in the work and the most likely cause of the wall's incipient failure. These problems were readily discovered when parts of the wall were opened up in 1978. The defects appear to have permeated the entire wall and do not appear to have been isolated phenomena. The complete absence of angle irons extending to the corners where cracking could be anticipated and the fact that wedge inserts and flashing were missing...