A.F. Lusi Construction, Inc. v. Peerless Insurance

847 A.2d 254, 2004 R.I. LEXIS 81, 2004 WL 856558
CourtSupreme Court of Rhode Island
DecidedApril 22, 2004
Docket2002-553-Appeal
StatusPublished
Cited by29 cases

This text of 847 A.2d 254 (A.F. Lusi Construction, Inc. v. Peerless Insurance) is published on Counsel Stack Legal Research, covering Supreme Court of Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A.F. Lusi Construction, Inc. v. Peerless Insurance, 847 A.2d 254, 2004 R.I. LEXIS 81, 2004 WL 856558 (R.I. 2004).

Opinion

OPINION

FLANDERS, Justice.

This case requires us to deconstruct various construction contracts, insurance agreements, and other related documents. In particular, we must decide whether an insurer for a subcontractor on a real-estate-construction project agreed to provide liability insurance and a defense for the general contractor with respect to a lawsuit alleging that the general contractor was negligent. After hacking our way through a dense thicket of so-called incorporation-by-reference, flow-down, and additional-insured provisions contained in the pertinent documents, we answer this question in the negative.

Facts and Travel

While working on a real-estate-construction project for the State of Rhode Island (state), one David Genereux (Genereux), an employee of Pasquazzi Brothers, Inc. (Pasquazzi), a subcontractor on this project, suffered personal injuries from an accident and collected workers’ compensation benefits from Pasquazzi’s workers’ compensation insurer during the period of his resulting incapacity for work. Gener-eaux also sued the general contractor, plaintiff, A.F. Lusi Construction, Inc. (Lusi). His complaint alleged that Lusi negligently maintained certain conditions at the job site that caused him to suffer personal injuries. In response to Gener-eux’s negligence claims, Lusi filed a Superior Court declaratory-judgment action against the defendant, Peerless Insurance Company (Peerless), the insurer for the subcontractor, Pasquazzi. Lusi alleged that Peerless breached its contractual duty to insure Lusi and to provide it with a *257 defense in connection with Genereux’s underlying personal-injury action. Lusi asserted that, in the policy that Peerless issued to Lusi’s subcontractor, Pasquazzi, Peerless agreed to defend and indemnify Lusi with respect to claims such as those asserted in Genereux’s underlying personal-injury action.

After the Superior Court denied Lusi’s motion for a partial summary judgment, the court entered a final judgment in favor of Peerless. On appeal, we conclude that Lusi failed to establish an agreement by Peerless to defend or to indemnify Lusi with respect to the negligence claims asserted against Lusi in the underlying personal-injury action. Consequently, we affirm the motion justice’s entry of final judgment in favor of Peerless.

In its appeal from the Superior Court judgment denying its request for a declaratory relief, Lusi points to the incorporation provision in Pasquazzi’s subcontract with Lusi as the source of Pasquazzi’s obligation to insure Lusi against any liability that Lusi might incur for personal injuries arising from Lusi’s alleged negligence in connection with the project. Lusi also asserts that the indemnification provision in its subcontract with Pasquazzi required Pasquazzi to indemnify and hold Lusi harmless for all claims against Lusi arising out of work performed by Pasquazzi “to the extent caused in whole or in part by any negligent act or omission of the Subcontractor [Pasquazzi].” Lusi next contends that Peerless’s duty to defend and indemnify Lusi arises from Pasquazzi’s contractual obligation to obtain insurance for Lusi. This obligation, Lusi posits, arises from both the so-called ineorpo-ration-by-reference and flow-down provisions contained in its subcontract with Pas-quazzi and in its primary contract with the state, respectively, as well as from Lusi’s status as an additional insured under Pas-quazzi’s general liability insurance policy with Peerless. Lusi argues that Pasquazzi undertook the same indemnity and insurance obligations with Lusi that Lusi undertook with the state. To support this contention, Lusi invokes not only the terms of its primary contract with the state, but also the provision in its subcontract with Pasquazzi that incorporates by reference the terms of Lusi’s primary contract with the state. Lusi submits that Peerless was obliged to provide such insurance because Pasquazzi had a written agreement with Lusi to obtain such insurance for Lusi’s benefit and because Peerless agreed in its policy with Pasquazzi “to include as an additional insured any person or organization with whom you [Pasquazzi] agreed, because of a written contract or agreement or permit, to provide insurance such as is afforded under this policy.”

Peerless counters that the terms of Pas-quazzi’s subcontract with Lusi do not clearly and unambiguously require Pas-quazzi to purchase liability insurance or to indemnify Lusi for Lusi’s own negligence, which is all that Genereux alleged in his underlying personal-injury action. Thus, it contends, the trial justice did not err in refusing to rule in Lusi’s favor on this issue as a matter of law. In addition, Peerless asserts that the provisions of G.L. 1956 § 6-34-1 1 apply to bar the enforce *258 ment of any agreements in which a subcontractor, such as Pasquazzi, agrees to indemnify a general contractor, such as Lusi, against third-party claims arising from the general contractor’s own alleged negligence. Here, Genereux, the personal-injury plaintiff, asserted in his complaint that Lusi’s negligence proximately caused his injuries. Therefore, according to Peerless, any agreements by Pasquazzi — including any agreements to purchase insurance for Lusi’s benefit that purport to require Pasquazzi or its insurer to indemnify Lusi for its own negligent acts — would be unenforceable because they would violate § 6-34-1 and the public policy embodied in that law against enforcing such agreements to indemnify another party for its own negligence.

I

The Relevant Contract Language Does Not Evidence a Clear Intent by Peerless and Pasquazzi to Designate Lusi as an Additional Insured Under the Terms of the Peerless Insurance Policy

A reviewing court has no need to construe contractual provisions unless those terms are ambiguous. W.P. Associates v. Forcier, Inc., 637 A.2d 353, 356 (R.I.1994). When the terms are clear and unambiguous, then the court should apply them as written. Id. In making this determination, the court should view the agreements in their entirety and give the contractual language its “plain, ordinary and usual meaning.” Id. On appeal, this Court will deem agreements to be ambiguous when they are reasonably and clearly susceptible to more than one rational interpretation. Id. But if the contractual language is unambiguous, the intention of the parties must govern “if that intention can be clearly inferred from the writing and * * * can be fairly carried out in a manner consistent with settled rules of law.” Id.

In this case, we hold that the relevant contract language does not evidence a clear intent by Peerless and Pasquazzi to designate Lusi as an additional insured under the terms of the Peerless insurance policy — at least not with respect to claims alleging that Lusi’s negligence caused an employee of Pasquazzi to suffer personal injuries while working at the job site. The terms of the subcontract between Lusi and Pasquazzi provide no support for Lusi’s contention that Pasquazzi was required to obtain insurance that would indemnify and provide a defense for Lusi against the negligence claims asserted in the underlying Genereux lawsuit.

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Cite This Page — Counsel Stack

Bluebook (online)
847 A.2d 254, 2004 R.I. LEXIS 81, 2004 WL 856558, Counsel Stack Legal Research, https://law.counselstack.com/opinion/af-lusi-construction-inc-v-peerless-insurance-ri-2004.