Court Opinion

ID: 2833079
Source: CourtListenerOpinion
Date Created: 2015-09-02 15:08:16.53482+00
Date Added: 2024-06-11T11:31:48.710660
License: Public Domain

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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.