Source: http://masscases.com/cases/app/31/31massappct626.html
Timestamp: 2019-04-19 04:28:48+00:00

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JAMES KELLY & others vs. DIMEO, INC.; THE WATERPROOFING COMPANY, third-party defendant.
Present: BROWN, DREBEN, & GREENBERG, JJ.
The judge in a civil action correctly determined that the appropriate date from which prejudgment interest under G. L. c. 231, Section 6C, was to be calculated in a judgment based on a contract of indemnification was the date when one party paid a settlement that the other party refused to indemnify [630-631], and he correctly determined that the rate of interest was set at eleven percent by the terms of the contract [631-632].
CIVIL ACTION commenced in the Superior Court Department on May 27, 1982.
The case was tried before Robert J. Hallisey, J., and a third-party claim for indemnification was heard by him.
Owen Gallagher for Dimeo, Inc.
Jerry E. Benezra (David A. Hilton with him) for The Waterproofing Company.
Dimeo's claim for indemnification under the agreement. We affirm.
The facts are not in dispute. On November 14, 1981, James Kelly, an employee of Waterproofing, [Note 1] fell off a ladder and was seriously injured while working on a project at the Carney Hospital. Kelly, as well as his wife and children, sued Dimeo for damages, claiming that the injuries were caused by the general contractor's negligence. Dimeo filed a third-party complaint against Waterproofing, seeking enforcement of the indemnification provisions of its subcontract. The underlying case was tried to a jury, the parties having agreed to bifurcate the third-party indemnification action for a subsequent jury-waived trial. The jury determined that Dimeo was ninety percent negligent and that Kelly was ten percent negligent and that their combined negligence caused the accident. In response to subsequent special questions, the jury determined that Waterproofing was not negligent. Following this, a judgment was entered in favor of Dimeo on its third-party complaint for indemnification, and Waterproofing was ordered to reimburse Dimeo with interest for the full amount to be paid to the Kellys. Waterproofing's appeal followed.
based on any statutory or common law theory. Cf. Liberty Mut. Ins. Co. v. Westerlind, 374 Mass. 524, 526-527 (1978). It relies wholly on its claim of an express contract of indemnity. Under Massachusetts law, a contract-based right to indemnification exists only if there is a binding contract between indemnitor and indemnitee in which such right is expressed or from which it can be fairly implied. H.P. Hood & Sons, Inc. v. Ford Motor Co., 370 Mass. 69, 77 (1976). As a caveat, however, a party may not obtain indemnification for its own negligence under a theory of implied contractual indemnity. Great Atl. & Pac. Tea Co. v. Yanofsky, 380 Mass. 326, 334 (1980). Rathbun v. Western Mass. Elec. Co., 395 Mass. 361, 363 (1985).
The trial judge found that Waterproofing's express agreement to indemnify Dimeo for the negligent acts of Waterproofing's employees, against "all claims," was sufficiently broad to encompass the Kellys' claims. The judge rejected Waterproofing's argument that the indemnity provision was inapplicable in this unusual situation, in which Waterproofing's "negligence" was merely imputed by Kelly's acts and not based on its own acts or omissions. Waterproofing, in essence, argues that it was unfair that it alone should shoulder the responsibility for Kelly's injuries when his own and Dimeo's negligence were deemed to be the causes of the accident. Waterproofing's challenge to this judgment is twofold. First, it contends that the wording of the indemnity provision is ambiguous as applied here, unlike the situation in Shea v. Bay State Co., supra. Waterproofing asserts that there is no language which "is reasonably clear" to demonstrate that the indemnification provision is implicated without a finding of some wrongdoing on its part. Secondly, Waterproofing asks us to interpret the indemnity provision to apply only in a situation in which its employee is exclusively at fault, so as to prevent shifting the burden from a negligent party, Dimeo, to one who bears no fault.
2. Plain meaning of the contractual indemnity clause. Waterproofing's position on both points flouts the express language of the indemnity clause. The third-party action against Waterproofing proceeded on the assumption that Waterproofing agreed to "indemnify and hold harmless [Dimeo] against all claims . . . arising out of [Waterproofing's] work under this subcontract, provided that any such claim . . . is attributable to bodily injury . . . and . . . is caused in whole or in part by any negligent act or omission" of its employee. We begin with the principle that this provision should be construed in accordance with its ordinary and plain meaning. deFreitas v. Cote, 342 Mass. 474, 477 (1961). See also Edwin R. Sage Co. v. Foley, 12 Mass. App. Ct. 20, 28 (1981). This type of indemnification clause is valid and enforceable -- even where the indemnitee is found to be "concurrently" negligent and where the indemnitor is free from any negligence. See, e.g., Whittle v. Pagani Bros. Constr. Co., 383 Mass. 796, 797-799 (1981) (construing language virtually identical to that in the instant case); Jones v. Vappi & Co., 28 Mass. App. Ct. 77 (1989). It is well established that the express indemnity clause like the one in this case rescues the indemnitee from paying damages, even when it is negligent, see Speers v. H.P. Hood, Inc., 22 Mass. App. Ct. 598, 602 (1986), and cases cited, and it is not "necessary that an indemnity clause state expressly that it covers the indemnitee's negligence." Aho v. Blanchette, 18 Mass. App. Ct. 149, 152 (1984).
Waterproofing contends that it is obliged to pay damages for the negligence of another and "is compelled to defend no misfeasance of [its] own." Ford v. Flaherty, 364 Mass. 382, 385 (1973). Since the jury found no active negligence on Waterproofing's part, the argument goes, it would be inequitable to allocate the active party's (Dimeo's) risk of loss to it. However, as has been pointed out, "[t]he `active-passive' test to determine when indemnification will be allowed . . . has in practice proven elusive and difficult of fair application."
Dale v. Dow Chem. Co., 30 N.Y.2d 143, 147 (1972). [Note 3] Where commercial entities have negotiated on a level playing field before entering their contractual arrangements, it is not necessary to explore the theoretical underpinnings of the indemnity doctrine in order to sustain the action of the trial judge. Rather, we believe that Waterproofing expressly agreed to increased liability exposure and that the policy concerns discussed in some earlier decisions developing equitable theories of indemnification, see, e.g., Pittsley v. Allen, 297 Mass. 83 (1937); Karcher v. Burbank, 303 Mass. 303 (1939); Barry v. Keeler, 322 Mass. 114 (1947), do not control this case. Here, Waterproofing expressly agreed (perhaps in an effort to advance its business interests in the competitive arena of the construction industry) to underwrite fully the conduct of its "employees" regardless of the degree of fault attributable to it; it should not be allowed to escape what it knowingly bargained for. "Agreements voluntarily made . . . are not to be lightly set aside on the ground of public policy or because as events have turned it may be unfortunate for one party." Crimmins & Pierce Co. v. Kidder Peabody Acceptance Corp., 282 Mass. 367, 379 (1933).
judge correctly computed the rate at eleven per cent per annum.
[Note 1] Kelly was also employed by Dimeo. On the day of the accident, however, he was compensated by Waterproofing as an on-site labor steward pursuant to the governing union contract, and Waterproofing admits that he was working as its employee.
[Note 2] The express indemnity clause stated, in pertinent part, "The Subcontractor shall indemnify and hold harmless the General Contractor and all of his agents and employees from and against all claims, damages, losses and expenses including attorney's fees arising out of or resulting from the performance of the Subcontractor's Work under this subcontract, provided that any such claim, damage, loss or expense (a) is attributable to bodily in[j]ury, sickness, disease, or death, or to injury to or destruction of tangible property (other than the Work itself) including the loss of use resulting therefrom and (b) is caused in whole or in part by any negligent act or omission of the Subcontractor or anyone directly or indirectly employed by him or anyone for whose acts he may be liable, regardless of whether it is caused in part by a party indemnified hereunder" (emphasis supplied).
[Note 3] It has been argued that the distinction between active and passive negligence is "artificial" and that the indemnity doctrine "evolved in the unnatural surroundings of an inflexible rule against contribution, and consequently was overextended as a device for reallocating loss." Note, Toward a Workable Rule of Contribution in the Federal Courts, 65 Colum. L. Rev. 123, 126 (1965).
[Note 4] Although the jury awarded compensatory damages to Kelly in the amount of $2,700,000 and a combined total of $230,000 to his wife and children on their consortium claims, the Kellys' postverdict settlement with Dimeo was in the amount of $1,122,530.

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