DocketNumber: No. 08-P-1111
Citation Numbers: 75 Mass. App. Ct. 613
Judges: Milkey
Filed Date: 10/30/2009
Status: Precedential
Modified Date: 6/25/2022
In 1998, an employee of Lamonica Construction Co., Inc. (Lamonica), was severely injured when he fell from a warehouse roof at a job site in Fairhaven. The employee pursued workers’ compensation remedies from Lamonica, and he filed a
This is the parties’ second appeal on these issues. In the first round of litigation, the Superior Court entered judgment that Lamonica was liable to defend and indemnify RCS Group based on an express indemnification provision in the parties’ subcontract. In an unpublished order issued pursuant to Appeals Court rule 1:28, we reversed that judgment after concluding that the indemnification provision violated G. L. c. 149, § 29C.
On appeal, Lamonica argues that the lower court had no jurisdiction to hear the contract claim and challenges the merits of the ruling on multiple grounds. On cross appeal, RCS Group challenges a different Superior Court judge’s refusal to award it damages for Lamonica’s contract breach.
We reject Lamonica’s jurisdictional argument, but we agree that the judge below erred in concluding that Lamonica had a contractual obligation to name RCS Group as an additional insured. We therefore reverse and remand.
Background. The arrangement between the parties. In 1998, a manufacturer named Nye Lubricants, Inc. (Nye Lubricants), hired RCS Group to replace a roof on a dilapidated warehouse in Fairhaven. RCS Group in turn subcontracted the job to La-
The litigation over the indemnification provision. Faced with a negligence action filed by the injured employee, RCS Group filed a third-party complaint against Lamonica. Count I of that complaint alleged that Lamonica was liable to indemnify RCS Group under the express indemnification provision set forth in subparagraph 5(a) of the subcontract. The complaint also alleged common-law indemnification (count II), contribution (count HI), and breach of contract (count IV). On April 18, 2002, a Superior Court judge allowed RCS Group’s motion for summary judgment on count I. The judge also mled against Lamonica on a fourth-party complaint it had brought against Nye Lubricant. Lamoni-ca’s efforts to seek interlocutory review of these rulings were unsuccessful.
At this point, Lamonica faced the prospect of having to indemnify RCS Group for any tort damages owed to the employee, even though Lamonica itself faced no direct tort liability.
Lamonica successfully appealed the first partial judgment.
The Superior Court proceedings on remand. Having prevailed on appeal, Lamonica requested and received permission to file counterclaims seeking reimbursement from RCS Group toward the settlement that Lamonica reached with its employee (including settlement of the claims the employee had filed against RCS Group). Meanwhile, on October 2, 2006, Lamonica’s insurer, Arbella Protection Insurance Co. (Arbella), filed a separate litigation against RCS Group’s insurer, First Financial Insurance Co. (First Financial), also seeking funding toward the settlement.
When it moved for an assessment of damages, RCS Group argued that it was entitled to damages in addition to its right to receive the benefit of Lamonica’s having settled the employee’s claim. Specifically, RCS Group argued that it was entitled to all of its attorney’s fees, which totaled $110,401.96.
Discussion. Jurisdiction. We must first resolve whether RCS Group’s breach of contract claim is properly before us. La-monica contends that this claim was dismissed with prejudice pursuant to a “judgment of dismissal” entered on July 22, 2004 (the third of the three partial judgments entered that day).
Lamonica’s premise that the breach of contract claim was subject to the judgment of dismissal is untenable. By its express terms, this judgment applied to “all other claims, counterclaims, and crossclaims” (emphasis added). Read in context, the term “other” was obviously intended to refer to claims “other” than those covered by the two other partial judgments. Thus, the claims subject to the judgment of dismissal included only those claims that were not set forth in RCS Group’s third-party complaint (the subject of the first partial judgment) or in Lamonica’s fourth-party complaint (the subject of the second partial judgment).
Breach of contract. The next question is whether the judge below erred in concluding that Lamonica breached its subcontract
As an initial matter, we note that the subcontract does not expressly state that Lamonica had a duty to name RCS Group as an additional insured (or otherwise to provide it direct coverage). We must therefore determine whether the language that does appear in the contract implies such a duty.
The operative sentence of the contract reads as follows:
“[Lamonica] shall maintain, at its own cost, such insurance as will protect it and [RCS Group] from (i) claims under the [w]orkmen’s [c]ompensation [l]aw of the State in which the [w]ork is being performed, and (ii) any claim for bodily injury, including death, and whether such [w]ork or performance are by [Lamonica] or any of [its] subcontractors or anyone directly or indirectly employed by [it], said insurance to be in the limits as set forth in the [c]ontract [documents.”
The key language is “as will protect.” In ordinary usage, “protect” means to shield a person or thing from adverse harm.
Although we agree that RCS Group’s reading is one possible interpretation of the phrase “as will protect,” we conclude that it is not the only reasonable interpretation. The insurance provision quoted above directly follows the obligation that Lamonica indemnify RCS Group. See Mejia v. American Cas. Co., 55 Mass. App. Ct. 461, 465 (2002) (specific contractual language should not be read in isolation but should be read in the context of the contract as a whole). Although that provision was eventually determined to be void, the parties presumably believed it to be valid when they signed the contract. See Dickson v. Riverside Iron Works, Inc., 6 Mass. App. Ct. 53, 55 (1978) (to determine parties’ intent, we examine circumstances surrounding making of contract as they existed at that time). Had the indemnification provision been valid, as the parties intended, then liability insurance purchased in Lamonica’s own name would have “protected” RCS Group fully so long as it covered Lamonica’s indemnification obligations (as the insurance contract purchased by Lamonica in fact did).
Based on this analysis, we conclude that subparagraph 5(b) is
Dismissal of Lamonica’s counterclaim. The only remaining issue that must be resolved involves the disposition of Lamonica’s counterclaims by which Lamonica sought to have RCS Group reimburse all or part of the $900,000 settlement (which Arbella had funded).
We do not mean to suggest that such claims will necessarily
Conclusion. For the reasons set forth above, we reverse the judgment of the Superior Court and remand this case for further proceedings consistent with this opinion.
So ordered.
That statute, which is discussed further in this opinion, voids certain types of indemnification agreements between general contractors and their subcontractors.
The exact provenance of the contractual language is not clear on the record, but counsel for RCS Group expressly acknowledged at oral argument that it was reasonable for the court to assume that his client, as the general contractor, “was going to dictate the terms of the contract” and that it “procured the contract.”
The workers’ compensation statute provided the employee his sole remedy as against Lamonica. See G. L. c. 152, § 23; Spellman v. Shawmut Woodworking & Supply, Inc., 445 Mass. 675, 679 (2006).
Lamonica unsuccessfully appealed the second partial judgment, which related to the fourth-party complaint brought against Nye Lubricant. That judgment is not at issue here.
Arbella Protection Ins. Co. vs. First Financial Ins. Co., Inc., Norfolk Superior Court, No. CV06-01686. At one point, Lamonica made a passing suggestion that the Superior Court join the two cases and “dispose of these interrelated actions simultaneously.” The record does not reflect whether the court ever seriously entertained this suggestion. Counsel reported at oral argument that the case between the two insurers had effectively been put on hold pending the outcome of this appeal.
The judge also rejected Lamonica’s argument that subparagraph 5(b) itself violated G. L. c. 149, § 29C. The judge ruled in Lamonica’s favor on counts II and in of the third-party complaint, and those claims are not at issue on appeal.
RCS Group claimed it was entitled to all fees, regardless of whether those fees were incurred in defending the employee’s claim or in litigating the third-party claims and counterclaims, and regardless of the degree of success it enjoyed in litigating any particular claim.
The entry of three partial judgments caused great and unnecessary confusion. This case presents another textbook example of why there should always be only one final judgment in a civil case, absent a certification pursuant to Mass.R.Civ.R 54(b), 365 Mass. 821 (1974). See Jones v. Boykan, 74 Mass. App. Ct. 213, 218 n.9 (2009).
Lamonica raised its jurisdictional argument below, but only by way of a motion for reconsideration after the judge ruled in RCS Group’s favor. Because we conclude that Lamonica’s argument fails on the merits, we need not consider whether the Superior Court judge was correct in rejecting the argument because it was untimely.
The claims subject to the third partial judgment included, at a minimum, those that Nye Lubricants brought against Lamonica in response to Lamonica’s fourth-party complaint (variously referenced on the docket as “counterclaims” and “cross-claims”).
As evidenced by its caption, the first partial judgment covered RCS Group’s third-party complaint without qualification. The fact that this “judgment” was presumably based on count I (since that was the only ground on which RCS Group had focused in its summary judgment brief) is beside the point. Indeed, had the rules been followed, there would have been a single final judgment applicable to the entire case.
Although the parties and the judge below focused on the fact that Lamonica did not specifically name RCS Group as an additional insured, coverage can be afforded to third parties through other means as well. See 9 Couch, Insurance § 126:7 (3d ed. 1997) (discussing blanket additional insured endorsements as an alternative to expressly identifying additional parties). For purposes of this appeal, these distinctions are not material.
See Webster’s Third New Inti. Dictionary 1822 (1993 ed.) (defining “protect” as “to cover or shield from that which would injure, destroy, or detrimentally affect”).
Under the commercial general liability policy that Lamonica purchased, there was an exclusion for contractual liability, but that exclusion did not apply to an “insured contract,” which was defined to include “[t]hat part of any other contract or agreement pertaining to your business . . . under which you assume the tort liability of another party to pay for ‘bodily injury’ or ‘property damage’ to a third person or organization.” See Garnet Constr. Co. v. Acadia Ins. Co., 61 Mass. App. Ct. 705, 707-709 (2004) (examining similar language).
Our conclusion that one party’s purchase of insurance in its own name can be said to satisfy a contractual obligation to purchase insurance “as will protect” another is reinforced by an examination of another aspect of the contract. The “as will protect” phrase in subparagraph 5(b) applies not only to Lamonica’s duty to purchase a general liability policy, but also to its duty to purchase workers’ compensation coverage. Under Massachusetts law, each employer is required to obtain its own workers’ compensation policy unless it qualifies as a self-insurer. G. L. c. 152, § 25A. Letteney’s Case, 429 Mass. 280, 285 (1999). When a subcontractor complies with this obligation and one of its employees is injured, the subcontractor’s policy is used to pay the claim. In the event that a subcontractor fails to purchase its own policy, the general
Neither party pointed to the existence of any extrinsic evidence that might help resolve the ambiguity. Compare Cardone v. Boston Regional Med. Center, Inc., 60 Mass. App. Ct. 179, 186-188 (2003) (question of fact exists where contract language is sufficiently ambiguous that the interpretation depends on disputed or undeveloped evidence).
Based on this opinion, we do not reach the merits of Lamonica’s alternative arguments or RCS Group’s cross-appeal seeking damages.
Had Lamonica breached a duty to name RCS Group as an additional insured, then Lamonica would not have had a viable claim to force RCS Group to reimburse it for a settlement that fell within the insurance coverage that Lamonica should have provided.
The fact that Arbella, and not Lamonica, actually funded the settlement does not mean that the claims seeking reimbursement must be brought in the
The separate litigation is not before us, and we therefore cannot assess the extent to which the two actions are congruent. We leave it to the Superior Court to decide whether the two actions should be consolidated.