American Insurance v. Siena Construction Corp.

23 Mass. L. Rptr. 439
CourtMassachusetts Superior Court
DecidedDecember 24, 2007
DocketNo. 034929
StatusPublished

This text of 23 Mass. L. Rptr. 439 (American Insurance v. Siena Construction Corp.) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Insurance v. Siena Construction Corp., 23 Mass. L. Rptr. 439 (Mass. Ct. App. 2007).

Opinion

Billings, Thomas P., J.

A. Introduction.

These cases, consolidated for all purposes, arise out of an explosion on July 15, 2002 at 320 Bent Street, Cambridge. 320 Bent Street was a new building, then in the final stages of construction, owned by Lyme Properties, Inc., whose subrogee American Insurance Company (“AIC”) is the plaintiff in No. 03-4929. The space in which the explosion occurred was being readied for occupancy by Microbia, Inc., whose sub-rogee Great Northern Insurance Company is the plaintiff in No. 04-618.

There is ample evidence, and the parties do not appear to dispute (at this juncture at least), that the explosion was fueled by an accumulation of natural gas in Cold Room 442, one of two cold rooms in the Microbia space. The gas was unscented, and ignited when a maintenance worker, getting the space ready for Microbia’s occupancy, was operating an electric floor buffer in the room. The issues raised by the motions before me concern whether the claims asserted by AIC are viable in the face of a contractual waiver-of-subrogation clause and — if they are— whether certain defendants are responsible for the gas having entered the room, or for its not having been ventilated out.

All motions and oppositions were capably documented, briefed, and argued. This opinion will assume familiarity with the underlying facts, and will therefore discuss those facts only insofar as necessary to communicate adequately the reasons for the decisions reached herein.

B. Motions for Summary Judgment of Defendants Arrowstreet, Inc., AHA Consulting Engineers, Inc., Siena Construction Corp., American Plumbing and Heating Corp., Minus Eleven, Inc., and Fred Williams, Inc. — Waiver of Subrogation Clauses.

All defendants remaining in the case have moved for summary judgment on the ground that recovery is barred by “Waiver of Subrogation” clauses found in section 1.3.7.4 of the Agreement Between Owner and Architect (under which Arrowstreet and AHA performed services)1 and section 11.5 of the General Conditions to the Contract for Construction (under which general contractor Siena and subcontractors American Plumbing and Heating, Minus Eleven, and Fred Williams provided services)2 bar recovery. Both clauses provide, in somewhat different language, that each contracting party waives claims for damages against the other(s), to the extent that those damages are covered by the claiming party’s insurance.

This being a subrogation case — in which all damages claimed by AIC were, by definition, covered by the Owner’s insurance — the defendants argue that the claims against them were waived. AIC responds that as a matter of law grounded in public policy, the waiver of subrogation clause does not extend to damages caused by a defendant’s gross negligence, or its violation of a statute or regulation. Additionally, AIC argues, only Siena — not its subcontractors — are protected by the waiver of subrogation in the General Conditions.

These legal arguments were considered early in the case, in decisions (Paper Nos. 29 & 30, respectively, entered 2/1/05) rendered by Judge Locke on a previous motion for summary judgment brought by Siena, and on American Plumbing and Heating’s motion to dismiss. Both motions were denied.

[440]*440Judge Locke acknowledged the general proposition that Massachusetts will enforce a waiver of subrogation clause in a case of ordinary negligence, see Haemonetics Corp. v. Brophy & Phillip Co., 23 Mass.App.Ct. 254 (1986); Fortin v. Nebel Heating Corp., 12 Mass.App.Ct. 1006 (1981). He also noted, however, the general disfavor, on public policy grounds, of contract clauses that shield a party from claims for gross negligence, Zavras v. Capeway Rovers Motorcycle Club, 44 Mass.App.Ct. 17, 19-20 (1997), or responsibility for a statutory or a regulatory code violation. Henry v. Mansfield Beauty Academy, 353 Mass. 507, 511 (1968); Vallone v. Donna, 49 Mass.App.Ct. 330, 332 (2000). He observed that at the time, no reported Massachusetts case had considered the application of these public policy concerns to waiver of subrogation clauses (as opposed to outright exculpatory clauses), and also that in this case, both gross negligence and code violations are alleged. He held that the caselaw concerning exculpatory clauses is transferable to waiver-of-subrogation clauses, and so denied Siena’s summary judgment motion.

Finally, on American Plumbing and Heating’s motion to dismiss, Judge Locke held that General Conditions paragraph 11.5 is, where subcontractors are concerned, a one-way street: Siena is required to exact a waiver of subrogation from its subcontractors, but the clause says nothing about subcontractors being protected from sub-rogation claims by the owner’s insurer. See Fortin, 12 Mass.App.Ct. at 1007 (construing General Conditions language very close to that in this case, and holding that waiver did not bar claims against subcontractor).3

Since Judge Locke’s rulings in this case, there have been at least three trial court decisions in other cases which have considered the reach of subrogation waivers under Massachusetts law and public policy.

In Federal Ins. Co. v. Cogswell Sprinkler Co., Inc., No. 03-CV-10920-MEL, 2005 WL 4169716 (D.Mass. Feb. 15, 2005), Judge Lasker held, as had Judge Locke two weeks before, that a negligence claim premised on a code violation (there, a violation of National Fire Protection Association standards as incorporated by reference into the Massachusetts State Building Code) was not barred by a waiver of subrogation. “Public policy,” the court held, precludes [a defendant] from exculpating itself from liability for negligence in a task that affects public interest and safety." The court therefore denied summary judgment for the defendant contractor.
In Federal Ins. Co. v. CBT/Childs Bertman Tseckares, Inc., 2007 WL 1630687 (Mass.Super. 2007; Connolly, J.) [22 Mass. L. Rptr. 472], another judge of this Court agreed, and denied summary judgment to a contractor who was likewise alleged to have violated the NFPA standards as adopted by the State Building Code.
On September 14 of this year, however, in Great Northern Ins. Co. v. Architectural Environments, Inc., 05-CV-12356-NMG, Judge Gorton approved what he appropriately characterized as the “very lucid and carefully researched” recommendation by Magistrate Judge Dein, that comes out the other way. Judge Dein began by noting the usefulness of waivers of subrogation in encouraging the contracting parties to carry adequate insurance, and in reducing the disruptions and transaction costs associated with claims. Report and Recommendation at 47, citing (inter alia) Haemonetics, 23 Mass.App.Ct. at 258. She pointed out that unlike the true exculpatory clauses considered in the cases on which the Cogswell Sprinkler and CBT/Childs cases (as well as Judge Locke’s decision in this case) relied, waivers of subrogation do not prevent compensation to the injured party- Report and Recommendation at 48-50. She cited numerous cases from other jurisdictions on both sides of the issue, and was convinced by those cases which have held that the public policies served by waivers of subrogation, and the goal of honoring the intentions of the contracting parties, override any contrary public policy concerns. Id. at 51-55.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Mickelson v. Barnet
460 N.E.2d 566 (Massachusetts Supreme Judicial Court, 1984)
Henry v. Mansfield Beauty Academy, Inc.
233 N.E.2d 22 (Massachusetts Supreme Judicial Court, 1968)
Corsetti v. Stone Co.
483 N.E.2d 793 (Massachusetts Supreme Judicial Court, 1985)
Glicklich v. Spievack
452 N.E.2d 287 (Massachusetts Appeals Court, 1983)
Toubiana v. Priestly
520 N.E.2d 1307 (Massachusetts Supreme Judicial Court, 1988)
Barbosa v. HOPPER FEEDS. INC.
537 N.E.2d 99 (Massachusetts Supreme Judicial Court, 1989)
Riley v. Presnell
565 N.E.2d 780 (Massachusetts Supreme Judicial Court, 1991)
Haemonetics Corp. v. Brophy & Phillips Co.
501 N.E.2d 524 (Massachusetts Appeals Court, 1986)
Roberts v. Department of Environmental Quality Engineering
404 Mass. 795 (Massachusetts Supreme Judicial Court, 1989)
Glidden v. Maglio
722 N.E.2d 971 (Massachusetts Supreme Judicial Court, 2000)
Fortin v. Nebel Heating Corp.
12 Mass. App. Ct. 1006 (Massachusetts Appeals Court, 1981)
Zavras v. Capeway Rovers Motorcycle Club, Inc.
687 N.E.2d 1263 (Massachusetts Appeals Court, 1997)
Vallone v. Donna
729 N.E.2d 648 (Massachusetts Appeals Court, 2000)
Federal Insurance v. CBT/Childs Bertman Tseckares, Inc.
22 Mass. L. Rptr. 472 (Massachusetts Superior Court, 2007)

Cite This Page — Counsel Stack

Bluebook (online)
23 Mass. L. Rptr. 439, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-insurance-v-siena-construction-corp-masssuperct-2007.