Rush v. Norfolk Electric Co., Inc.

• Decision Date: 04 October 2007
• Docket Number: No. 06-P-1105.,06-P-1105.
• Citation: 874 N.E.2d 447,70 Mass. App. Ct. 373
• Parties: Michael RUSH & another<SMALL><SUP>1</SUP></SMALL> v. NORFOLK ELECTRIC COMPANY, INC., & another<SMALL><SUP>2</SUP></SMALL>; Harding & Smith, Inc., third-party defendant; New England Insulation Company, fourth-party defendant.
• Court: Appeals Court of Massachusetts

874 N.E.2d 447

70 Mass. App. Ct. 373

Michael RUSH & another¹ v. NORFOLK ELECTRIC COMPANY, INC., & another²; Harding & Smith, Inc., third-party defendant; New England Insulation Company, fourth-party defendant.

No. 06-P-1105.

Appeals Court of Massachusetts, Suffolk.

Argued March 8, 2007.

Decided October 4, 2007.

James K. Kaufmann, Andover, for Modern Continental Construction Co., Inc.

Michael P. Giunta, Boston (John W. Moran with him) for Harding & Smith, Inc.

Richard W. Jensen, Boston, for New England Insulation Company.

Present: COWIN, ARMSTRONG, & VUONO, JJ.

COWIN, J.

We address a claim for indemnification following a judgment for damages arising from significant physical injuries sustained by the plaintiff, Michael Rush, when he was working at the Deer Island secondary waste treatment project of the Massachusetts Water Resources Authority (the authority). Plaintiff Colleen Rush also obtained a judgment for loss of consortium. Acting on a posttrial motion for summary judgment, a judge of the Superior Court, in a comprehensive and well-reasoned opinion, allowed the claim of the codefendant, Modern Continental Construction Co., Inc. (Modern Continental), for indemnification by the third-party defendant, Harding & Smith, Inc. (Harding & Smith), but only with respect to Colleen Rush's judgment for loss of consortium and Modern Continental's expenses of defending both the Michael Rush and the Colleen Rush claims. Asserting that it is entitled to indemnification with respect to the Michael Rush judgment also,³ Modern Continental filed a timely notice of appeal. We affirm.

1. Background. The underlying facts are not disputed. The authority contracted with Modern Continental to perform as general contractor on the project, with those parties entering into a contract containing general conditions set forth in 109 single-spaced printed pages. Modern Continental subcontracted electrical work to the codefendant, Norfolk Electric Company, Inc. (Norfolk Electric), and plumbing work to the third-party defendant, Harding & Smith. Harding & Smith in turn entered into a sub-subcontract with the fourth-party defendant, New England Insulation Co. (NEI), under which NEI would provide insulation and piping systems for the project. Plaintiff Michael Rush was employed by NEI at the time of his injuries.

Rush commenced an action alleging that his injuries were attributable to the negligence of both Modern Continental and Norfolk Electric. Liberty Mutual Insurance Company (Liberty Mutual), Norfolk Electric's general liability insurer, assumed the defense of both defendants after Modern Continental, pursuant to an indemnification agreement, tendered the defense to Norfolk Electric. A Superior Court jury found that each defendant was thirty-seven and one-half percent negligent, while Rush was twenty-five percent contributorily negligent. The jury determined that Rush had incurred damages in the amount of $1,153,445; reduced to account for his negligence of twenty-five percent, see G.L. c. 231, § 85, he was awarded $865,083.75 before the addition of interest. As indicated, Colleen Rush received a judgment of $25,000 before interest for loss of consortium. Liberty Mutual paid in full the judgments entered against both defendants,⁴ but did so in the name of Modern Continental alone.

Various claims for indemnification were reserved by agreement until the plaintiffs' claims were resolved. By means of a third-party complaint, Modern Continental asserted a claim for complete indemnification (judgment and defense costs) against Harding & Smith pursuant to the subcontract between those parties.⁵ Harding & Smith in turn filed a fourth-party complaint seeking indemnification pursuant to its sub-subcontract with NEI.⁶ As indicated, the judge allowed Modern Continental's indemnification claim only in part. In addition, he allowed Harding & Smith's claim against NEI for the same amounts for which Harding & Smith was found to be liable to Modern Continental.⁷ Disputes regarding the amount of defense costs, including attorney's fees, have been settled, and all that remains is Modern Continental's contention that it has been deprived erroneously of full indemnification by Harding & Smith.

2. The indemnification provisions. Modern Continental's claim that it is entitled to full indemnification from Harding & Smith is based principally on paragraph 1.3 of the parties' subcontract. Paragraph 1.3 appears in Article I, which is entitled "Work to be performed." That paragraph states in relevant part:

"Subcontractor [Harding & Smith] does further agree to be bound to the General Contractor [Modern Continental] by the aforementioned General Contract Documents and all other instruments herein referred to and further to assume toward the General Contractor all the obligations and responsibilities pertaining to the work that the General Contractor by the aforesaid General Contract Documents has assumed to the owner including the furnishing of such warranties and guarantees as are required in the General Contract Documents for the work of this subcontractor" (emphasis in original).

The paragraph continues by providing that Harding & Smith shall, with respect to the work to which it committed itself, comply with all of the directives of Modern Continental, and extend to Modern Continental all of the rights, privileges, and immunities which the owner (the authority) enjoys under its contract with Modern Continental.

Pursuant to this language, according to Modern Continental, each and every part of the general contract applies to the plumbing work undertaken by Harding & Smith. This includes paragraph 6.29.1 of the said general contract which provides in relevant part:

"To the fullest extent permitted by Laws and Regulations, the Contractor [Modern Continental] shall indemnify and hold harmless the Authority (the owner) and the CM [defined elsewhere as the construction manager] and their consultants, agents and each of their directors, officers and employees from and against all claims, damages, losses and expenses, direct, indirect and consequential (including but not limited to fees and charges of engineers, architects, attorneys and other professionals and court costs) arising out of or resulting from the performance of the Work, provided that any such claim, damage, loss or expense (a) is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property including the loss of use, and (b) is caused in whole or in part by any negligent act or omission of the Contractor any Subcontractor, any person or organization directly or indirectly employed by any of them to perform or furnish any of the Work or anyone for whose acts any of them may be liable, regardless of whether it is caused in part by a party indemnified hereunder or arises by or is imposed by Laws and Regulations regardless of the negligence of any such party."

The language thus obligated Modern Continental to hold harmless and to indemnify the authority with respect to claims for personal injuries or property damage incurred in connection with the work performed by Modern Continental on the project if such personal injuries occurred, even in part, as a result of the negligence of Modern Continental or any person or entity for which it was responsible. By means of paragraph 1.3 of its subcontract with Harding & Smith, Modern Continental argues, it effectively obtained from Harding & Smith indemnification that is the equivalent of what Modern Continental provided to the authority in the event that the negligence of Harding & Smith or the negligence of those for whom it was responsible contributed in any way to losses or expenses suffered by Modern Continental. An undertaking by a subcontractor to indemnify for the entirety of a loss or expense notwithstanding that its negligence is only partially responsible is legally permissible. See G.L. c. 149, § 29C; Herson v. New Boston Garden Corp., 40 Mass.App.Ct. 779, 788, 667 N.E.2d 907 (1996) ("§ 29C does not proscribe full indemnification when the conduct of the subcontractor is only a partial cause of the injury").

Nothing more appearing, the broad clause of the general contract (paragraph 6.29.1) that provides for full indemnification would apply to Harding & Smith, and would entitle Modern Continental to complete indemnification by virtue of the incorporation clause in paragraph 1.3 of the subcontract. Modern Continental incurred a loss as a result of the judgments against it obtained by Michael and Colleen Rush. That loss was attributable in part to the negligence of Michael Rush, who was found by the jury to have been twenty-five percent contributorily negligent with respect to his accident. Because Rush was employed at the time by NEI, and because NEI was a sub-subcontractor of Harding & Smith, there occurred a negligent act causing loss and expense to Modern Continental for which Harding & Smith was responsible, thereby triggering its obligation to provide full indemnification.⁸ See Whittle v. Pagani Bros. Constr. Co., 383 Mass. 796, 799, 422 N.E.2d 779 (1981) (subcontract language imposes on subcontractor same obligation to indemnify contractor as that imposed on contractor under general contract with owner).

There is, however, another contractual provision that bears on the question. In the subcontract between Modern Continental and Harding & Smith, there appears a separate indemnification provision in paragraph 4.1:

"To the extent permitted by law, the Subcontractor shall (1) fully indemnify and save the General Contractor wholly harmless from any and all claims, liabilities, liens, demands and causes of action for or on account of any injury to persons, damage to property, fines, penalties, assessments, or any loss of whatever kind or nature arising out of or in consequence of the performance of the Subcontractor's work hereunder, but only to the extent caused in whole or in...