Case Title: Coghlin Elec. Contractors, Inc. v. Gilbane Bldg. Co.

Citation: 

Docket Number: SJC-11778

State: massachusetts

Court: Massachusetts Supreme Court

Date: 2015-09-02T00:00:00Z

Document:
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SJC-11778 
 
COGHLIN ELECTRICAL CONTRACTORS, INC.  vs.  GILBANE BUILDING 
COMPANY & another;1 DIVISION OF CAPITAL ASSET MANAGEMENT AND 
MAINTENANCE, third-party defendant. 
 
 
 
Worcester.     March 2, 2015. - September 2, 2015. 
 
Present:  Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & 
Hines, JJ. 
 
 
Contract, Public works, Construction contract, Delivery, 
Warranty, Indemnity.  Warranty.  Indemnity.  Public Works, 
Construction management at risk. 
 
 
 
 
Civil action commenced in the Superior Court Department on 
July 17, 2013. 
 
 
A motion to dismiss a third-party complaint was heard by 
Brian A. Davis, J. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
 
John W. DiNicola, II (Michael Brangwynne with him) for 
Gilbane Building Company. 
 
James A. Sweeney, Assistant Attorney General, for Division 
of Capital Asset Management and Maintenance. 
 
The following submitted briefs for amici curiae: 
                                                          
 
 
1 Travelers Casualty & Surety Company of America. 
 
2 
 
 
David J. Hatem, Cheryl A. Waterhouse, & Amanda E. Mathieu 
for American Council of Engineering Companies of Massachusetts & 
another. 
 
Shannon A. Reilly for Construction Industries of 
Massachusetts. 
 
Joel Lewin, Robert V. Lizza, Jonathan T. Elder, & Robert T. 
Ferguson, Jr., for Associated General Contractors of 
Massachusetts, Inc. 
 
Hugh J. Gorman, III, & Jeffrey J. Pyle for Columbia 
Construction Company. 
 
 
 
GANTS, C.J.  This case requires us to resolve three issues 
regarding a public construction contract that implements the 
construction management at risk delivery method, pursuant to 
G. L. c. 149A:  (1) Does the owner who furnishes the plans and 
specifications in a public construction management at risk 
project give an implied warranty of their sufficiency for the 
purpose intended, as the owner does under our common law in 
traditional design-bid-build construction projects?  (2) If so, 
did the parties to the construction management at risk contract 
in this case disclaim the implied warranty?  (3) If they did 
not, did the indemnification provision in the contract prohibit 
the construction manager at risk (CMAR) from filing a third-
party complaint against the owner in a case brought by a 
subcontractor seeking reimbursement of additional costs, thus 
requiring the CMAR to file a separate complaint against the 
owner to recover the additional costs caused by an insufficient 
or defective design under the implied warranty? 
3 
 
 
We conclude:  (1) under our common law, a public owner of a 
construction management at risk project gives an implied 
warranty regarding the designer's plans and specifications, but 
the scope of liability arising from that implied warranty is 
more limited than in a design-bid-build project; (2) the 
construction management at risk contract in this case did not 
disclaim the implied warranty; and (3) the indemnification 
provision in the contract did not prohibit the CMAR from filing 
a third-party complaint against the owner that sought 
reimbursement under the implied warranty for damages claimed by 
the subcontractor arising from the insufficiency of or defects 
in the design.2 
 
Background.  The Division of Capital Asset Management and 
Maintenance (DCAM) is the owner of a construction project to 
build a psychiatric facility at the site of the Worcester State 
Hospital (Project).  DCAM entered into a contract with 
Ellenzweig Associates (Designer) to prepare the Project's 
designs.  See G. L. c. 7C, § 44 ("Designer" is individual or 
other entity "engaged in the practice of architecture, landscape 
architecture, or engineering" and registered in discipline 
                                                          
 
 
2 We acknowledge the amicus briefs submitted by American 
Council of Engineering Companies of Massachusetts and 
Massachusetts Chapter of the American Institute of Architects; 
Associated General Contractors of Massachusetts, Inc.; 
Construction Industries of Massachusetts; and Columbia 
Construction Company. 
 
4 
 
required for project).  When the designs were partially 
completed, DCAM entered into a contract with Gilbane Building 
Company (Gilbane) as the CMAR.3  Gilbane entered into a 
subcontract with Coghlin Electrical Contractors, Inc. (Coghlin), 
to perform electrical work.  The subcontract incorporated by 
reference the terms of the contract between DCAM and Gilbane. 
 
On July 19, 2012, approximately one month before it 
substantially completed its work, Coghlin submitted to Gilbane a 
request for equitable adjustment of the contract price.  Nearly 
one year later, on July 17, 2013, Coghlin filed a complaint in 
the Superior Court against Gilbane, alleging, inter alia, that 
Gilbane committed a breach of its subcontract with Coghlin by 
causing Coghlin to incur additional costs resulting from various 
scheduling, coordination, management, and design errors.4  
Gilbane then filed a third-party complaint against DCAM, 
asserting that, "in the event that Coghlin proves its claims 
against Gilbane," DCAM committed a breach of its contract with 
                                                          
 
 
3 The contract between Gilbane Building Company (Gilbane) 
and the Division of Capital Asset Management and Maintenance 
(DCAM) states that Gilbane "is an independent contractor and is 
not an agent or employee of, or a joint venturer with, DCAM." 
 
4 Coghlin Electrical Contractors, Inc. (Coghlin), also named 
Gilbane's surety under a payment bond, Travelers Casualty and 
Surety Company of America, as a defendant in its complaint.  See 
G. L. c. 149, § 29. 
 
5 
 
Gilbane by refusing to pay Gilbane the amounts claimed by 
Coghlin. 
 
Because DCAM's liability on the third-party complaint is 
contingent upon Coghlin prevailing on its complaint, we recite 
the relevant factual allegations in both the complaint and the 
third-party complaint.5  In October, 2009, Coghlin began 
performing electric work on the first of two sets of buildings 
and, for the first year, was generally able to perform on 
schedule.  However, beginning around November, 2010, various 
errors, omissions, and changes severely affected Coghlin's 
performance, causing Coghlin to incur a forty-nine per cent 
increase in labor hours.  Coghlin's increased costs resulted 
both from Gilbane's alleged mismanagement of the Project, such 
as its failure to issue monthly schedules and coordinate the 
                                                          
 
5 The judge declined to convert the motion to dismiss into a 
motion for summary judgment, so we do not consider the affidavit 
and the attached correspondence submitted by Gilbane with its 
opposition to the motion to dismiss as part of the record on 
appeal, and rest solely on the allegations in the pleadings, as 
well as the contracts referenced in the pleadings.  See Marram 
v. Kobrick Offshore Fund, Ltd., 442 Mass. 43, 45 n.4 (2004) 
(where offering memorandum and subscription agreement were not 
attached to complaint but plaintiff had notice and "relied on 
them in framing the complaint," attachment of such documents to 
motion to dismiss did not convert motion to one for summary 
judgment).  See also Sher v. Desmond, 70 Mass. App. Ct. 270, 281 
n.14 (2007) (attached correspondence in support of motion to 
dismiss did not convert motion into summary judgment motion 
where judge did not give notice to parties "that the judge 
intended to treat the motion to dismiss as one for summary 
judgment"). 
 
6 
 
various subcontractors, and from design defects and changes.  As 
to the design, Coghlin alleged that the ceilings in the project 
were designed to leave two feet of space between the ceilings 
and the bottom of the structural steel, but "[w]hen Project work 
began, it was revealed that the design required approximately 
five feet of mechanical and electrical work to be placed in the 
ceiling area."  After six weeks of attempting to resolve the 
discrepancy, Coghlin was directed to place the electrical work 
as high as possible in the ceiling, and was told that the 
Designer and Gilbane would address the issue later.  Coghlin 
also alleged that, "[w]hen wall framing began, based upon design 
changes and for other reasons not related to Coghlin's 
performance, it became evident that the floors would not be 
framed in a logical and sequential fashion."  In addition, 
Coghlin alleged that the Designer specified that Coghlin use 
certain specific electrical fixtures on the Project, but the 
Designer rejected them when Coghlin filed the product 
submittals. 
 
In its third-party complaint, Gilbane claims that it 
performed its work in accordance with the contract, and that 
DCAM has not paid Gilbane for the amounts sought by Coghlin.  
DCAM filed a motion to dismiss the third-party complaint.  After 
conducting a hearing, the judge allowed the motion and judgment 
was entered in favor of DCAM. 
7 
 
 
In his decision, the judge recognized that Gilbane's third-
party complaint effectively alleged that DCAM should indemnify 
Gilbane for "damages caused by design changes and design 
errors," that were "unrelated to any wrongdoing on Gilbane's 
part," for which Gilbane may be liable to Coghlin.  The judge, 
citing J. Lewin & C.E. Schaub, Jr., Construction Law § 7:3, at 
452 (2012) (Lewin & Schaub, Jr.), acknowledged that 
Massachusetts common law "traditionally has been protective of 
construction contractors in circumstances where the owner has 
supplied erroneous or, perhaps, ambiguous plans and 
specifications."  See Lewin & Schaub, Jr., supra at § 7:3, at 
464 (2014-2015) ("where a party provides a contractor with a set 
of plans and specifications for construction to follow, there is 
an implied warranty that those plans and specifications are 
adequate and sufficient").  The judge concluded, however, that 
the implied warranty of the owner applies only where the 
construction project uses the traditional design-bid-build 
construction method, in which the owner retains a designer to 
design the project, construction bids are submitted based on 
that design, and the general contractor who wins the contract is 
expected to build the project in accordance with the plans and 
specifications of the design.  The judge determined that this 
implied warranty does not apply where, as here, the construction 
project uses the construction management at risk method, given 
8 
 
the "material changes in the roles and responsibilities 
voluntarily undertaken by the parties" to such contracts. 
 
The judge also determined that the indemnification 
provision in the contract between DCAM and Gilbane, which 
requires Gilbane to indemnify, defend, and hold harmless DCAM 
from all claims, damages, losses, and expenses "arising out of 
or resulting from the performance of the Work," as defined in 
the contract, imposes liability on Gilbane for any damages it 
might win in its third-party claims against DCAM.  The judge 
concluded that, because Gilbane effectively is suing itself in 
its third-party complaint, Gilbane's third-party claims create 
"an impermissible 'circuity of obligation'" (citation omitted).  
Gilbane appealed, and we allowed its motion for direct appellate 
review. 
 
Discussion.  "We review the allowance of a motion to 
dismiss de novo," accepting as true the facts alleged in the 
plaintiff's and the third-party plaintiff's complaints as well 
as any favorable inferences that reasonably can be drawn from 
them.  Galiastro v. Mortgage Elec. Registration Sys., Inc., 467 
Mass. 160, 164 (2014).  To survive a motion to dismiss, the 
facts alleged and the reasonable inferences drawn therefrom must 
"plausibly suggest . . . an entitlement to relief."  Flagg v. 
Alimed, Inc., 466 Mass. 23, 26-27 (2013), quoting Iannacchino v. 
Ford Motor Co., 451 Mass. 623, 636 (2008). 
9 
 
 
1.  Construction management at risk contracts under G. L. 
c. 149A.  a.  Construction project delivery methods.  The 
construction management at risk contract at issue in this case 
differs from contracts made pursuant to the conventional design-
bid-build method.  In a design-bid-build project, "the owner 
retains an engineer or an architect on a separate contract to 
complete the design of the public facility," and once the design 
is complete, the design is made available to potential bidders 
and the construction contract is advertised for bid.  Associated 
Subcontractors of Mass., Inc. v. University of Mass. Bldg. 
Auth., 442 Mass. 159, 165 n.8 (2004), quoting D. Gransberg, The 
Cost of Inaction:  Does Massachusetts Need Public Construction 
Reform? at 3 (1999).  Contractors submit prices, and the project 
is awarded to the "lowest responsive and responsible bidder."  
Associated Subcontractors of Mass., Inc., supra, quoting 
Gransberg, supra.  The construction services contract between 
the owner and the contractor allocates to the contractor the 
responsibility of "selecting, coordinating, and administrating 
the work of all of the various subcontractors."  Lewin & Schaub, 
Jr., supra at § 2:6, at 14.  "[T]he risk of the design is 
allocated to the engineer or architect, while the risk of 
construction is allocated to the contractor."  Id. at 14-15. 
 
On January 1, 2005, § 27 of the "Act further regulating 
public construction in the Commonwealth" became effective, see 
10 
 
St. 2004, c. 193, § 27, authorizing public agencies to use two 
additional delivery methods:  design-build and construction 
management at risk.  In a design-build project, the owner 
contracts with a single party that assumes both the design and 
the construction responsibilities.  See G. L. c. 149A, § 15 
("Design build" defined as "construction delivery system that 
provides responsibility for the delivery of design services and 
construction services within a single contract"); Lewin & 
Schaub, Jr., supra at § 2:6, at 15.  By replacing two entities 
with one, owners may reduce delays and focus responsibility on a 
single entity.  See J. Sweet & M.M. Schneier, Legal Aspects of 
Architecture, Engineering and the Construction Process § 14.09E 
(9th ed. 2013) (Sweet & Schneier) ("Owners are often frustrated 
when they look to the designer who claims that the contractor 
did not follow the design, with the latter claiming that the 
problem was poor design").  In Massachusetts, a public agency is 
only authorized to use the design-build method for certain 
public works projects, not public building projects.  G. L. 
c. 149A, § 14. 
 
The construction management at risk method is available to 
public agencies for the "construction, reconstruction, 
installation, demolition, maintenance or repair of any building 
estimated to cost not less than [$5 million]."  Id. at § 1.  
Similar to the design-bid-build method, the owner enters into 
11 
 
separate contracts, one with the designer and one with the CMAR.  
Id. at § 3 (public agency must procure services of designer, who 
is "independent of the owner's project manager and [CMAR]," 
before submitting application to use construction management at 
risk method).  However, in the construction management at risk 
method, the owner may contract with the CMAR before the design 
has been completed.  Id. at § 7 (total dollar amount for CMAR 
services is based on design documents "which are no less 
developed than [sixty] per cent").  See Office of the Inspector 
General, Experience of Massachusetts Public Agencies with 
Construction Management at Risk Under M. G. L. c. 149A, at 9 
(Oct. 2009) (OIG Report) (CMAR "selected during the design stage 
of the project").  By contracting during the design phase, the 
owner may "involve the [CMAR] in project planning and . . . 
benefit from the [CMAR's] expertise."  Lewin & Schaub, Jr., 
supra at § 17:42, at 1226.  See P.L. Bruner & P.J. O'Connor, 
Jr., On Construction Law, § 6:59 (2002) (Bruner & O'Connor, Jr.) 
(CMAR "provides preconstruction services tailored to introduce 
construction expertise into the design phase").  The CMAR 
provides its services in exchange for a guaranteed maximum price 
(GMP), representing the maximum amount that the owner will pay.  
See G. L. c. 149A, § 2; id. at § 7.  Absent a change order, the 
CMAR is generally responsible for any costs that exceed the GMP.  
See Lewin & Schaub, Jr., supra at § 17:42, at 1227. 
12 
 
 
b.  Implied warranty of the designer's plans and 
specifications.  We now consider whether the owner in a 
construction management at risk contract made pursuant to G. L. 
c. 149A impliedly warrants the sufficiency of the designer's 
plans and specifications.  In design-bid-build projects, "[i]t 
is well established that where one party furnishes plans and 
specifications for a contractor to follow in a construction job, 
and the contractor in good faith relies thereon, the party 
furnishing such plans impliedly warrants their sufficiency for 
the purpose intended."  Alpert v. Commonwealth, 357 Mass. 306, 
320 (1970).  See United States v. Spearin, 248 U.S. 132, 136 
(1918) ("if the contractor is bound to build according to plans 
and specifications prepared by the owner, the contractor will 
not be responsible for the consequences of defects in the plans 
and specifications").  See also Richardson Elec. Co. v. Peter 
Francese & Son, 21 Mass. App. Ct. 47, 50 (1985) ("There is 
implied in a set of construction plans and specifications a 
warranty that they are accurate as to descriptions of the kind 
and quantity of work required").  This implied warranty between 
the owner and the contractor "is a representation that the 
design is defect-free," and the contractor "need only show that 
the defect exists and that he suffered damages as a result 
thereof" in order to recover.  Bruner & O'Connor, Jr., supra at 
§ 9:82, at 670, 671 n.5, quoting Harrington, Thum, & Clark, The 
13 
 
Owner's Warranty of the Plans and Specifications for a 
Construction Project, 14 Pub. Con. L. J. 240, 259-260 (1984).  
In design-bid-build projects, the implied warranty of the owner 
"is not overcome by the usual clauses requiring builders to 
visit the site, to check the plans, and to inform themselves of 
the requirements of the work."  Spearin, supra.  However, the 
implied warranty does not absolve a contractor of all liability 
related to design; where the contractor does not rely in good 
faith on the designer's plans and specifications, the contractor 
is responsible for the increased costs arising from design 
defects.  See Alpert, supra.  Consequently, where a contractor 
encounters an "obvious omission, inconsistency, or discrepancy 
[in the design], he should take steps, by way of his own 
investigation, or by putting questions to the owner (or owner's 
representatives), to bridge gaps in the documents."  Richardson 
Elec. Co., supra at 52.  Compare John F. Miller Co. v. George 
Fichera Constr. Corp., 7 Mass. App. Ct. 494, 498 (1979) (if 
discrepancy is subtle, and if reasonable, conscientious 
contractor examining design "might miss a requirement which is 
out of sequence or ineptly expressed, the burden of the error 
falls on the issuer of the specifications").6 
                                                          
 
 
6 Because the issue is not raised, we do not address the 
distinction between "performance" specifications and "design" 
specifications.  See J. Lewin & C.E. Schaub, Jr., Construction 
Law § 7:4, at 467 (2014-2015) (design specifications "describe 
14 
 
 
Until today, we have not considered whether the owner's 
implied warranty of the designer's plans and specifications 
applies in public construction management at risk projects.  See 
generally Bruner & O'Connor, Jr., supra at § 6:67, at 617 
("Because construction management is a newer approach and has 
not been the subject of as many court decisions, there is less 
certainty as to interpretation of the contract documents, and 
less uniformity as to the extent and allocation of 
responsibilities, and it is more difficult to predict 
liabilities").  When we adopted the implied warranty as part of 
our common law, public agencies were generally limited to using 
the design-bid-build method, see Lewin & Schaub, Jr., supra at 
§ 17:41, at 1225; OIG Report, supra at 1, where the owner "is in 
control of the design development process" and the contractor 
"has no ability or opportunity to contemporaneously, 
meaningfully, or otherwise influence the process of design 
development and is required to construct in strict conformance 
with the furnished project design."  Peterson, One Small Step in 
                                                                                                                                                                                           
the materials to be used in the work and the manner in which the 
contractor's work is to be constructed in detail" while 
performance specifications "focus on the result to be achieved" 
and give contractor discretion as to how to complete final 
product).  We assume for the purposes of reviewing the allowance 
of the motion to dismiss that the designs at issue in this case 
contain design specifications.  See id. at 468 (contractor 
"cannot rely on an implied warranty to shield itself from 
liability arising out of defective performance specifications"). 
 
15 
 
Mindset, One Giant Leap for the Construction Law Industry:  How 
the Judicial Stage Is Set for IPD and the Only Thing Missing Is 
Willing Participants, 39 N. Ky. L. Rev. 557, 561-562 (2012), 
quoting Hatem, Design Responsibility in Integrated Project 
Delivery:  Looking Back and Moving Forward 14 (Jan. 2008) 
(unpublished manuscript). 
 
The relationship between the owner and the CMAR is 
different from the traditional relationship between the owner 
and the general contractor in a design-bid-build project.  The 
act defines "construction management at risk" as 
"a construction method wherein a construction management at 
risk firm provides a range of preconstruction services and 
construction management services which may include cost 
estimation and consultation regarding the design of the 
building project, the preparation and coordination of bid 
packages, scheduling, cost control, and value engineering, 
acting as the general contractor during the construction, 
detailing the trade contractor scope of work, holding the 
trade contracts and other subcontracts, prequalifying and 
evaluating trade contractors and subcontractors, and 
providing management and construction services, all at a 
[GMP], which shall represent the maximum amount to be paid 
by the public agency for the building project, including 
the cost of the work, the general conditions and the fee 
payable to the construction management at risk firm" 
(emphasis added). 
 
G. L. c. 149A, § 2.  Unlike design-bid-build projects where the 
designer designs and the contractor builds, the CMAR may provide 
consultation regarding the design of the project and therefore 
may influence the project's final plans and specifications.  See 
OIG Report, supra at 9 ("final design may reflect or incorporate 
16 
 
substantial input from the [CMAR]").  Additionally, the CMAR 
agrees to a GMP and has the opportunity when negotiating the 
contract to consider the risk of incurring additional costs.  
See id. at 32 (construction management at risk contracts contain 
"CM Contingency," which is monetary amount intended to cover 
risk of "project costs that are not associated with scope 
changes or latent conditions encountered during the construction 
phase").  See also Bruner & O'Connor, Jr., supra at § 9:84, at 
678 ("If . . . it can be clearly established that the contractor 
did or should have accounted for possible errors in the plans 
and specifications when pricing the work, then it appears 
inappropriate to hold the owner to this implied warranty 
standard"). 
 
As significant as these differences in relationship are, we 
are not persuaded that the relationships are so different that 
no implied warranty of the designer's plans and specifications 
should apply in construction management at risk contracts made 
pursuant to G. L. c. 149A and that the CMAR should bear all the 
additional costs caused by design defects.  See OIG Report, 
supra at 12-13, 58 ("Owner-generated design changes and 
incomplete or flawed plans and specifications may . . . warrant 
change orders that increase the contract price" and "owner is 
also responsible for the cost of change orders, which increase 
the original GMP").  See also Hackenbrach, An Overview of Major 
17 
 
Project Delivery Methods and Their Design Risk Allocation, in 
Shared Design § 3.01[C], at 3-11 (2011) (CMAR generally bears 
risk that actual costs to complete project may exceed price it 
has agreed upon with owner, "unless it can show that the costs 
increased due to owner-directed changes, the owner's actions or 
omissions, or other circumstances which the contract treats as 
within the owner's responsibility").  The CMAR may consult 
regarding the design of the project, but the owner, through the 
designer, ultimately controls the design and is the final 
arbiter of it; unless the contract states otherwise, the owner 
is generally under no obligation to accept the CMAR's 
suggestions regarding the plans and specifications.  The implied 
warranty derives in part from the basic principle that 
"responsibility for a defect rests on the party to the 
construction contract who essentially controls and represents 
that it possesses skill in that phase of the overall 
construction process that substantially caused the defect."  
Sweet & Schneier, supra at § 16.02A.  Although the CMAR may be 
more likely to bear some responsibility for a design defect than 
a general contractor in a design-bid-build project, we adhere to 
this basic principle by applying the implied warranty to public 
construction management at risk contracts, where the owner 
maintains control of the design by contracting a separate 
designer and may be able to transfer liability to the designer 
18 
 
responsible for the defect.  See Hackenbrach, supra at 3-12 ("In 
a 'textbook' [construction management at risk contract], the 
[CMAR] does not bear the risk of design deficiencies, as the 
owner retains a separate design professional and the [owner's 
implied warranty] applies . . ."). 
 
Nor are we persuaded that the Legislature, when it enabled 
the construction management at risk method in public building 
projects by enacting G. L. c. 149A, intended to abolish the 
owner's implied warranty and to require the CMAR to bear the 
entirety of the risk arising from design defects.  The statute 
states that the CMAR "may" provide "consultation" regarding the 
design but is not required to do so.  Ordinarily, to "consult" 
means to discuss, give advice, or confer.  See Milton v. 
Massachusetts Bay Transp. Auth., 356 Mass. 467, 474 n.8 (1969), 
quoting Webster's Third New International Dictionary 490 (1963) 
("consult" defined as "to deliberate on," "discuss," "to ask 
advice of," "to take counsel," and "confer").  The possibility 
that the CMAR may consult regarding the building design does not 
suggest that the CMAR should be the guarantor against all design 
defects, even those that a reasonable CMAR would not have been 
able to detect.  Although the statute requires a GMP for the 
CMAR's services, the GMP may be established when only sixty per 
cent of the design documents have been developed.  The 
Legislature could not reasonably have intended that the CMAR, by 
19 
 
agreeing to a GMP, would bear all the risk arising from the 
design when the CMAR may not have seen as much as forty per cent 
of the design documents before agreeing upon a GMP.  Even where 
a CMAR is given substantial consultative responsibilities 
regarding the design, the owner remains free to reject the 
CMAR's advice and suggestions.  In addition, under G. L. c. 7C, 
§ 51 (e), "[a] public agency shall not enter into a contract for 
design services unless the public agency or the designer . . . 
has obtained professional liability insurance covering negligent 
errors, omissions and acts of the designer," and the total 
amount of insurance "shall at a minimum equal the lesser of [$1 
million] or [ten] per cent of the project's estimated cost of 
construction, or such larger amounts as the public agency may 
require."  The statute does not permit a lesser amount of 
professional liability insurance in construction management at 
risk projects.  Based on the language of G. L. cc. 149A and 7C, 
we understand that the legislative intent in providing the 
construction management at risk alternative was to permit the 
CMAR a greater consultative role regarding the project's design, 
not to eliminate the owner's responsibility for design defects. 
 
 Although the owner's implied warranty applies in a public 
construction management at risk contract, the differences 
between the responsibilities of a general contractor in a 
design-bid-build project and those of a CMAR affect the scope of 
20 
 
the implied warranty.  The general contractor in a design-bid-
build project may benefit from the implied warranty where it 
relied on the plans and specifications in good faith, but the 
CMAR may benefit from the implied warranty only where it has 
acted in good faith reliance on the design and acted reasonably 
in light of the CMAR's own design responsibilities.  The CMAR's 
level of participation in the design phase of the project and 
the extent to which the contract delegates design responsibility 
to the CMAR may affect a fact finder's determination as to 
whether the CMAR's reliance was reasonable.  The greater the 
CMAR's design responsibilities in the contract, the greater the 
CMAR's burden will be to show, when it seeks to establish the 
owner's liability under the implied warranty, that its reliance 
on the defective design was both reasonable and in good faith.  
See generally Sweet & Schneier, supra at § 14.04 ("all of the 
modern variations [on the design-bid-build method] have as a 
common denominator:  a blurring of the lines of 
responsibility").  Therefore, the CMAR may recover damages 
caused by the breach of the implied warranty, but only if it 
satisfies its burden of proving that its reliance on the 
defective plans and specifications was reasonable and in good 
faith.  The amount of recoverable damages may be limited to that 
which is caused by the CMAR's reasonable and good faith reliance 
21 
 
on design defects that constitute a breach of the implied 
warranty. 
 
2.  Express disclaimer of implied warranty.  Having found 
that there is an implied warranty of the designer's plans and 
specifications in construction management at risk contracts made 
pursuant to G. L. c. 149A, we now consider whether the contract 
between DCAM and Gilbane expressly disclaims the owner's implied 
warranty.  See Daniel O'Connell's Sons v. Commonwealth, 349 
Mass. 642, 647-648 (1965) ("express disclaimer" of owner's 
responsibility for accuracy of geological data precluded 
liability based on contractor's reliance on such data); D. 
Federico Co. v. Commonwealth, 11 Mass. App. Ct. 248, 252 (1981) 
(implied warranty not recognized "where the contract terms 
specifically precluded warranty of, or reliance on" designer's 
quantity estimates).  See also White v. Edsall Constr. Co., 296 
F.3d 1081, 1085 (Fed. Cir. 2002) ("Only express and specific 
disclaimers suffice to overcome the implied warranty that 
accompanies design specifications"); Lewin & Schaub, Jr., supra 
at § 7:3, at 466 ("implied warranty [of design sufficiency] 
. . .  may be mitigated by an express disclaimer of liability"). 
 
We find no express disclaimer of the implied warranty of 
the designer's plans and specifications in the contract between 
DCAM and Gilbane.  We note that DCAM, on appeal, concedes that 
"the Superior Court's dismissal in this case does not negate 
22 
 
principle that the owner remains liable to the [CMAR] for design 
changes, errors and omissions which flow from the work of the 
designer" and that "[i]f Gilbane is found liable to Coghlin and 
the liability flows from design issues rather than other aspects 
of [Gilbane's] responsibilities, then there would have to be an 
allocation of that liability between Gilbane, [DCAM] and the 
[D]esigner."  DCAM and Gilbane agree that the contract does not 
impose full responsibility for design defects on Gilbane, and 
the contract supports their interpretation. 
As the judge recognized, the contract delegates extensive 
responsibilities to Gilbane to "carefully study" and "carefully 
compare" all design-related documents; "take field measurements 
and verify field conditions," compare them to the designs, and 
"report to the Designer any questions, errors, inconsistencies, 
or omissions."  Gilbane must "review" the designs "on a 
continuous basis" with a group of architects or engineers in 
order to "discover inconsistencies, errors and omissions," and 
"review the design documents for clarity, consistency, 
constructability, maintainability/operability and coordination 
among the trades."  Gilbane also must attend Project meetings 
with DCAM and the Designer and "consult with DCAM and the 
Designer concerning planning for construction of the Project." 
Although Gilbane undertakes significant design-related 
obligations, there is no express abrogation of the implied 
23 
 
warranty.  See White, 296 F.3d at 1085, citing Spearin, 248 U.S. 
at 137 ("general disclaimers requiring the contractor to check 
plans and determine project requirements do not overcome the 
implied warranty, and thus do not shift the risk of design flaws 
to contractors who follow the specifications").  The contract 
instead states that the "recommendations and advice of [Gilbane] 
concerning design modifications and alternatives shall be 
subject to the review and approval of DCAM," and, the Designer 
"shall decide all questions which may arise as to the 
interpretation of the [designs] and as to the fulfillment of 
this Contract on the part of [Gilbane]."  Such provisions show 
that the Designer and DCAM maintain authority and control over 
the Project's design.  In comparison, when describing some of 
Gilbane's design-related responsibilities, the contract states: 
"[Gilbane] shall consult with DCAM and the Designer 
regarding the selection of materials, building systems and 
equipment, and shall recommend alternative solutions 
whenever design details affect construction feasibility, 
schedules, cost or quality (without, however, assuming the 
Designer's responsibility for design) and shall provide 
other value engineering services to DCAM" (emphasis added). 
 
In stating that Gilbane shall recommend alternative design-
related solutions, without assuming "the Designer's 
responsibility for design," the plain language of the contract 
supports, rather than disclaims, the implied warranty.7 
                                                          
 
 
7 The "No Personal Liability; Consequential Damages" 
provision of the "Miscellaneous Provisions" article, stating, 
24 
 
 
Thus, in the absence of an express disclaimer, the owner's 
implied warranty of the designer's plans and specifications 
applies.  Here, Gilbane has undertaken extensive design review 
and consultation obligations while the Designer remains 
responsible for producing the designs.  If Gilbane is found 
liable for additional costs to Coghlin, Gilbane may be able to 
recover, but only to the extent that the additional costs were 
caused by Gilbane's reasonable and good faith reliance on the 
defective plans and specifications that resulted in a breach of 
the owner's implied warranty, despite Gilbane's own contractual 
design responsibilities. 
 
3.  Indemnification provision.  Section one of the 
indemnification provision of the contract provides in pertinent 
part: 
"To the fullest extent permitted by law, [Gilbane] shall 
indemnify, defend . . . and hold harmless DCAM and their 
officers, agents, . . . employees, [and] representatives 
. . . from and against all claims, damages, losses and 
expenses, including but not limited to court costs and 
attorneys' fees, arising out of or resulting from the 
performance of the Work, including but not limited to those 
arising or resulting from:  labor performed or furnished 
and/or materials used or employed in the performance of the 
Work; violations by [Gilbane] . . . of any Laws; violations 
of any provision of this Contract by [Gilbane] . . . ; 
injuries to any persons or damage to any property in 
                                                                                                                                                                                           
"In no event shall DCAM or [Ellenzweig Associates (Designer)] be 
liable to the [CMAR] except for obligations expressly assumed by 
DCAM or the Designer under the Contract Documents," does not 
constitute a specific or express disclaimer of the implied 
warranty of the designer's plans and specifications. 
 
25 
 
connection with the Work; or any act, omission, or neglect 
of [Gilbane's] Personnel.[8] 
 
"[Gilbane] shall be obligated as provided above, regardless 
of whether or not such claims, damages, losses and/or 
expenses, are caused in whole or in part by the actions or 
inactions of a party indemnified hereunder. . . ." 
 
 
Section two of the provision, titled "Designer's Actions," 
states: 
"The obligations of [Gilbane] under Section [one] above 
shall not extend to the liability of the Designer, its 
agents or employees, arising out of (i) the preparation or 
approval of maps, Drawings, opinions, reports, surveys[,] 
Change Orders, designs or Specifications, or (ii) the 
giving of or the failure to give directions or instructions 
by the Designer, its agents or employees provided such 
giving or failure to give is the primary cause of the 
injury or damage." 
 
The judge concluded that the indemnification provision 
required Gilbane to indemnify DCAM for "any liability" that 
might be imposed upon DCAM as a result of Gilbane's own third-
                                                          
 
 
8 "Work" is a defined term in the contract: 
 
"The Work consists of all the work identified in the 
Contract Documents.  The Work comprises the completed 
construction required by the Contract Documents and 
includes all labor, tools, materials, supplies, equipment, 
permits, approvals, paperwork, calculations, submittals, 
and certificates necessary to develop, construct and 
complete the Work in accordance with all Laws, and all 
construction and other services required to be supervised, 
overseen, performed or furnished by [Gilbane] or that the 
Contract Documents require [Gilbane] to cause to be 
supervised, overseen, performed or furnished. [Gilbane] 
shall provide and perform for the Contract Price all of the 
duties and obligations set forth in the Contract 
Documents." 
 
26 
 
party claims.  Thus, according to the judge, Gilbane's third-
party complaint created an impermissible "circuity of 
obligation," because Gilbane may not seek damages from DCAM when 
DCAM would have a right to be indemnified by Gilbane for those 
same damages.  Furthermore, the judge rejected Gilbane's 
contention that section two excluded any obligation to 
indemnify, defend, and hold harmless DCAM for design defects, 
and found that section two only excused Gilbane from the 
obligation to indemnify, defend, and hold harmless the Designer, 
as one of DCAM's "agents [or] representatives." 
 
The judge's reasoning was premised on his conclusion that 
Gilbane did not have the benefit of the implied warranty of the 
designer's plans and specifications.  We instead interpret the 
indemnification provision in light of the implied warranty and 
conclude that, although broad in scope, the indemnification 
provision does not cover claims, damages, losses, and expenses 
arising out of the Designer's work, as opposed to Gilbane's 
design-related duties.  Here, the contract states that the 
indemnification provision is triggered by claims, damages, 
losses, and expenses "arising out of or resulting from the 
performance of the Work," which we interpret to mean Gilbane's 
performance.  See Bruner & O'Connor, Jr., supra at § 10:58 
("Nearly every indemnity provision contains language limiting 
the indemnitor's obligation to loss occasioned in some way or 
27 
 
another to the activities or work of the indemnitor").9  As part 
of its "Work" under the contract, Gilbane is responsible for 
"construction and other services required to be supervised [and] 
overseen," but Gilbane does not "supervise" or "oversee" the 
Designer's work.  See Department of Community Affairs v. 
Massachusetts State College Bldg. Auth., 378 Mass. 418, 430 
(1979), quoting Fluet v. McCabe, 299 Mass. 173, 179 (1938) ("to 
supervise" means "to oversee, to have oversight of, to 
superintend the execution of or performance of [a thing], or the 
movements or work of [a person]; to inspect with authority; to 
inspect and direct the work of others").  Rather, the contract 
provides that Gilbane's recommendations are subject to the 
review and approval of DCAM and that the Designer has authority 
over the interpretation of the designs.  Gilbane reviews and 
consults regarding the designs, but the contract expressly 
declares that Gilbane does not assume the "Designer's 
responsibility for design."  In light of the implied warranty of 
the designer's plans and specifications, and the contractual 
definition of "Work," we conclude that claims, damages, losses, 
and expenses that arise out of the Designer's performance, as 
                                                          
 
9 In its brief, DCAM states that the contract "requires 
Gilbane to defend DCAM from all claims "arising out of the 
performance of Gilbane's work."  Moreover, DCAM describes the 
contractual definition of "Work" as defining "'Work' for which 
Gilbane is responsible." 
28 
 
opposed to Gilbane's design consultation and review performance, 
do not trigger the indemnification provision.10 
 
Furthermore, we conclude that section two of the 
indemnification provision exempts Gilbane of its obligations to 
defend, indemnify, or hold harmless both the Designer and DCAM 
for additional costs caused by design defects.  The judge 
interpreted this section as exempting only the Designer from 
Gilbane's duties under section one of the indemnification 
provision.  But where the owner, through the implied warranty, 
is legally responsible for the designer's plans and 
specifications, and where the CMAR has a contractual 
relationship with the owner but not the designer, the apparent 
purpose of this provision can be wholly accomplished only by 
interpreting it to include both the designer and the owner who 
impliedly warrants the designer's plans and specifications.  See 
Key Constr., Inc. v. State Auto Prop. & Cas. Ins. Co., 551 F. 
Supp. 2d 1266, 1268, 1270-1271 & n.2 (D. Kan. 2008) (applying 
Oklahoma law, subcontractor not required to indemnify contractor 
for losses or injuries caused by architect's plans and 
specifications, where indemnification provision stated that 
                                                          
 
 
10 Because Gilbane has plausibly alleged that the claims of 
Coghlin, for which it seeks recovery from DCAM, arise out of 
design defects attributable to the Designer, and are therefore 
outside of the triggering language of the indemnification 
provision, we do not address DCAM's circuity of obligation 
argument. 
 
29 
 
subcontractor's obligations "shall not extend to the liability 
of the Architect").  If we were to interpret section two as the 
judge did, the Designer effectively would be indemnified by 
Gilbane for increased labor and material costs arising from 
defects in its design, even though the contract expressly 
declares that Gilbane has no duty to indemnify the Designer.  
The reason is that Gilbane can only sue DCAM, not the Designer, 
to recover these additional costs under its contract, and would 
be barred from doing so under the judge's interpretation, thus 
negating any possibility that the Designer would need to defend 
a third-party claim brought by DCAM to recover these damages.  
Therefore, we conclude that Gilbane is exempt from its 
obligations to indemnify, defend, and hold harmless DCAM for 
damages caused by defects in the Designer's plans and 
specifications that constitute a breach of the implied warranty, 
and that the indemnification provision does not bar Gilbane's 
third-party complaint. 
 
4.  Third-party complaint.  DCAM contends that, even if it 
may be found liable to Gilbane for defects in the Designer's 
work, the third-party complaint was properly dismissed, because 
Gilbane may only bring a claim against DCAM after Coghlin wins a 
judgment against Gilbane based at least in part on a finding of 
"liability" attributable to the Designer's work.  According to 
DCAM, Gilbane's filing of a third-party complaint against DCAM 
30 
 
is inconsistent with its duty to defend DCAM under the 
indemnification provision.  It contends that compliance with 
that provision requires Gilbane first to defend against 
Coghlin's claims to final resolution.  Pursuant to this 
argument, only if Gilbane is found liable to Coghlin, and that 
liability is attributable to the Designer's work, may Gilbane 
pursue a claim against DCAM. 
 
Rule 14 of the Massachusetts Rules of Civil Procedure, as 
amended, 385 Mass. 1216 (1982), seeks to avoid the duplicative 
efforts that DCAM's interpretation would dictate, by allowing a 
defendant to file a third-party complaint against a party "who 
is or may be liable" to the defendant "for all or part of the 
plaintiff's claim against him."  "Because Rule 14 expressly 
allows what is in effect anticipatory litigation, a third-party 
defendant may not and should not object on the grounds that the 
defendant's liability has not yet been established."  Reporters' 
Notes to Rule 14, Mass. Ann. Laws Court Rules, Rules of Civil 
Procedure, at 335 (LexisNexis 2014-2015).  Where the claims 
alleged do not trigger the indemnification provision, and a two-
step procedure would run counter to the purposes of rule 14 and 
common practice in construction law, we shall not interpret the 
duty to defend or any other obligation in the indemnification 
provision to require Gilbane to forebear from filing suit 
against DCAM until a judgment has been obtained in the Coghlin 
31 
 
suit, unless there is express language in the contract requiring 
these two steps.  See Sweet & Schneier, supra at § 2.06 ("In 
construction disputes, it is common for the defendant to assert 
a counterclaim against the plaintiff or to make claims against 
third parties arising from the same transaction").  See, e.g.,  
Campbell Hardware, Inc. v. R.W. Granger & Sons, 401 Mass. 278, 
279 (1987) (public construction dispute in which subcontractor 
sued general contractor for additional work performed and 
general contractor brought third-party action against public 
owner).  There is no such express language in the contract 
between DCAM and Gilbane.  Therefore, we decline to prevent 
Gilbane from bringing its third-party complaint. 
 
Conclusion.  Because Gilbane's third-party complaint 
against DCAM plausibly states a claim for relief, we vacate the 
allowance of the motion to dismiss and the entry of judgment, 
and we remand the case to the Superior Court for further 
proceedings consistent with this opinion.11 
 
 
 
 
 
 
 
 
So ordered. 
 
                                                          
 
 
11 We acknowledge that Gilbane has requested that we take 
judicial notice of the contract between DCAM and the Designer as 
a public record, even though it was neither referenced in nor 
appended to the pleadings.  In light of our reversal of the 
dismissal in this case, we need not decide the issue.