USCA1 Opinion

UNITED STATES COURT OF APPEALS

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
____________________

Nos. 95-2051
95-2207

CHARLES MACGLASHING AND SHARLENE MACGLASHING,

Plaintiffs, Appellees,

v.

DUNLOP EQUIPMENT COMPANY, INC.,

Defendant, Appellee.

____________________

RESTORATION PRESERVATION MASONRY, INC.,

Third-Party Defendant, Appellant.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Reginald C. Lindsay, U.S. District Judge]

___________________

____________________

Before

Cyr, Circuit Judge,

_____________
Coffin and Bownes, Senior Circuit Judges.
_____________________
____________________

Robert P. Powers, with whom Michael R. Byrne, Andre A. Sansou

________________
_________________ ________________
and

Melick & Porter

________________

were

on

brief

for

Restoration

Preservat

Masonry, Inc., appellant.

Thomas G. Hoffman, with whom Thomas M. Greene,
__________________
_________________
Greene & Hoffman, P.C.
________________________
Sharlene

MacGlashing,

were on
plaintiffs,

brief

for Charles

appellees

and

Paul D. Hoffm
_____________
MacGlashing
Dunlop

Equipm

Company, Inc., defendant, appellee.

____________________

July 25, 1996

____________________

BOWNES, Senior Circuit Judge.

This appeal concerns

BOWNES, Senior Circuit Judge.

_____________________

the

interpretation and enforceability

clause

in a

lease

of an indemnification

between third-party

defendant-appellant

Restoration Preservation Masonry, Inc. ("RPM") and defendant-

appellee

Dunlop

Equipment

Plaintiff-appellee

elevated

while

masonry

Company,

Charles MacGlashing

work platform

leased

MacGlashing and

("Dunlop").

was injured

by Dunlop

he and another employee of RPM

work.

Inc.

to RPM

when an

collapsed

were using it in their

his wife, residents

of New

Hampshire, brought a diversity action in tort against Dunlop,

Massachusetts

Massachusetts.

indemnification

corporation,

Dunlop

clause.

sued

in

the

RPM,

Prior to

district

invoking

trial the

court

the

of

lease

MacGlashings,

with court approval, entered into a settlement agreement with

Dunlop.

The issue

standing

on

appeal is

in the shoes of

the settlement

whether the

MacGlashings,

Dunlop, can collect

the amount of

from RPM under the

the lease between RPM and Dunlop.

favor

of the

MacGlashings and

indemnification clause of

This issue was decided

Dunlop by

in

summary judgment.

There is no question that Massachusetts law applies.

RPM maintains

that it has no

lease agreement to indemnify

Charles

breached

MacGlashing's

the agreement.

obligation under the

Dunlop for damages flowing from

accident

because

Dunlop

materially

It also challenges the scope of the

-22

indemnification clause.

Discerning

no error in the district

court's summary judgment analysis, we affirm.

I.
I.

BACKGROUND
BACKGROUND
__________

Viewed

nonmoving

party,

in the

the

light

facts

most favorable

are

as

to RPM,

follows.

RPM,

the

Massachusetts-based corporation, employed Charles MacGlashing

as

brick

involved in

located in

Corporation

mason until

September

a work-related

2,

1993,

accident at The

Brookline, Massachusetts.

("Longwood"),

owner

of

In

when he

was

Longwood Towers

1993, the Longwood

The

Longwood

Towers

complex, commissioned RPM to conduct phase II of a renovation

project at Longwood

completed

a year

involved removal

top of

Towers.

earlier

Like phase I,

by NER,

and replacement of

three eight-story

During

brick and stone

NER.

been

("NER"), phase

buildings located in

RPM was formed by former employees of

including RPM's

Inc.

which had

II

at the

the complex.

Several of them,

president Paul Haven, had worked on phase I.

both phase I and II,

mobile, elevated work platforms

fitted with eight-foot outrigger

devices, which extended off

the

main platform

to expand

its width,

were utilized

stone and brick removal and to make certain setback

of

the

buildings

accessible.

The

-33

portions

outriggers

modifications to the original platform design.

for

were

On September 2, 1993, MacGlashing

James

Proctor,

were removing

piece

and a co-worker,

of

stone from

the

parapets of Building B when the work platform they were using

collapsed.

Both

Proctor died

who

was

men

from the

fell

thirty-nine at

paralyzed and

stories to

injuries he sustained.

the

injuries that hospitalized

partially

eight

time,

ground.

MacGlashing,

survived, but

him for six

in constant

the

suffered

months and left

pain.

him

These injuries

included, inter alia, broken bones, internal and neurological

_____ ____

damage,

a ruptured

aorta and

lung damage, and lacerations.

$800,000.00 in medical fees

accident.

His

bladder, a

perforated colon,

MacGlashing incurred more than

and expenses as a result

future medical costs

and net

of the

economic loss

have been

projected between $600,000.00 to

$1.1 million

parties

collapsed

to $1.3 million,

agreed that

$1.1 million and

respectively.

the platform

involved in

At

trial, the

the accident

because it could not bear the weight placed on it,

but disagreed about whether the platform had been defectively

designed,

Dunlop.

used

negligently,

Dunlop, whose

or

negligently

business consists of

modified

by

supplying work

platforms for sale or

lease, provided the platforms employed

in

II of

both phase

project.

It

I and

executed a

provide four platforms with

had left NER to form RPM.

the Longwood

July 7,

Towers renovation

1993, lease

agreement to

RPM's president, Paul Haven, who

-44

The lease agreement executed between RPM and Dunlop

was

a standard

form

contract and

contained the

indemnification clause:

12.

THE LESSEE

LESSOR

OF

OBLIGATION

ANY
IN

THE

HEREBY

ABSOLVES THE

RESPONSIBILITY
EVENT

OF

OR

ACCIDENT,

REGARDLESS OF CAUSES OR CONSEQUENCES, AND

THAT

ANY

COSTS,

CLAIMS,

COURT

OR

following

ATTORNEY'S
FROM

FEES, OR

LIABILITY RESULTING

THE USE OF DESCRIBED EQUIPMENT WILL

BE INDEMNIFIED BY
AGAINST

WHOM

THE LESSEE

THE CLAIMANT

REGARDLESS
OR CLAIMANTS

INSTITUTE ACTION.

II.
II.

PROCEEDINGS BELOW
PROCEEDINGS BELOW
_________________

The

MacGlashings

brought

jurisdiction suit,

see 28 U.S.C.
___

seeking

on

recovery

theories

liability, and breach of warranty.

negligence

in

the

design

and

federal

diversity

1332(a), against Dunlop,

of

negligence,

product

They charged Dunlop with

modification

of

the

work

platforms leased to RPM, negligence in failing to inspect the

platforms and

failing to

repair defects

and damage, and

negligence in

warn and instruct RPM employees in the use of the

platform.

They

implied warranty

also

that the work

and fit

for

amended

their complaint

under

asserted that

their intended

Mass. Gen.

platforms were

use.

The

to assert

L. ch. 143,

relevant to this appeal.

-55

Dunlop

51.

breached

merchantable

MacGlashings

claims

These

the

later

against Longwood

claims are not

Dunlop filed a

seeking

RPM

indemnification pursuant

denied

any

counterclaimed,

lease

third-party complaint against

to their

indemnification

RPM,

lease agreement.

responsibility

and

alleging that Dunlop materially breached the

agreement

by

providing

defective

and

unreasonably

dangerous equipment.

Each of the parties

before

the magistrate

judge.

filed summary judgment motions

Dunlop and

the MacGlashings

moved for summary judgment on Dunlop's third-party complaint.

They

maintained

contained

in

the

that,

lease

under

the

indemnification

agreement, RPM

indemnify Dunlop for any liability

was

clause

obligated

to

resulting from the use of

the

leased

equipment and

that

Dunlop

did not

breach its

obligations under that agreement.

this joint

motion

and

filed

its own

judgment on Dunlop's third-party

it

contested

the

executed

with

breached

the

fitness for

by

Dunlop,

implied

of

the

claiming

that

warranties

of

test the

and outriggers

for

summary

In both instances,

lease

Dunlop

agreement

materially

merchantability

a particular purpose contained

failing to

platforms

enforceability

RPM contested

motion

claims.

materially

in the agreement

load-bearing capacity

prior to delivery

and

of the

of them

work

to the

project site.

The case

her report

was assigned to

and recommendations,

she

a magistrate judge.

first addressed

In

RPM's

-66

summary judgment

motion.

claim

lease

that

included

the

an implied

purpose, under Mass.

that

it contained

The magistrate

agreement it

warranty

Gen. L.

an implied

judge denied RPM's

executed

of fitness

ch. 106,

warranty

for a

with

Dunlop

particular

2-315, but

agreed

of merchantability,

under Mass. Gen. L.

ch. 106,

recommended that RPM's motion

because

she

found

that

2-314.

The

magistrate judge

for summary judgment be denied

genuine issues

of

material

fact

existed as to whether Dunlop breached its implied warranties.

Turning to the

filed by

Dunlop and

joint motions for

summary judgment

the MacGlashings, the

magistrate judge

concluded that the record, viewed in RPM's favor, precluded a

dismissal with

prejudice, of RPM's counterclaim

She recommended, however,

joint motion

complaint

be

for

that Dunlop and the

summary judgment

allowed.

barring a determination

The

on Dunlop's

magistrate

for breach.

MacGlashings'

third-party

judge found

that Dunlop materially

that,

breached the

lease agreement,

RPM was "obligated to

indemnify Dunlop for

any liability resulting from Charles MacGlashing's use of the

leased

equipment."

conduct

amounted

contract"

parties

She

to a

was an issue

filed timely

concluded

material

or serious

of fact for

objections

report.

-77

that "whether

the jury.

to the

breach

Dunlop's

of the

Each of the

magistrate judge's

The district court

part, and

of

issued an

modifying, in part, the

the magistrate judge.

magistrate

judge's

order accepting,

Report and Recommendation

The district court agreed with the

determination

summary judgment should be denied.

that

RPM's

rejected

obligation

Charles

material

on Dunlop's

third-party

the

magistrate

to

indemnify

MacGlashing's

breach

Massachusetts law,

Dunlop

by Dunlop.

a party's

for

conclusion

for

could

The

MacGlashings was

complaint,

judge's

injuries

motion

While it also agreed that

summary judgment in favor of Dunlop and the

appropriate

in

the

court

that

RPM's

damages arising

be

court

breach of an

relieved

held that,

from

by

under

implied warranty

was

insufficient

to

invalidate

broadly

worded

a jury trial

on the

indemnification clause.

The district

court scheduled

various claims

asserted by

date

however,

arrived,

settlement

the parties.

the

Before the

trial

entered

into a

MacGlashing's

agreement with Dunlop, subject to court approval.

The settlement contemplated satisfying the MacGlashings' suit

for damages against Dunlop with a $750,000.00 cash payment --

approximately 75 percent of

to

Dunlop through

its

the insurance coverage available

insurer

--

and the

assignment

of

Dunlop's claims against RPM and Longwood to the MacGlashings.

Under the

Charles

agreement,

MacGlashing in

judgment

was

the amount

to enter

in

favor

of $4,560,000.00

of

and in

-88

favor

of

Sharlene

MacGlashings agreed

MacGlashing

for

to seek no further

$300,000.00.

The

recovery from Dunlop

in the event they could not recover from RPM or Longwood.

The

evidence

district

court held

before approving

hearing and

the settlement.

At

reviewed

the hearing

RPM's counsel stated, inter alia:

__________

don't

objection

believe
to

that

the

settlement

RPM

has

any

structure

of

the

under

circumstances .
settlement

is

the

. .

current

I believe that

fair and

the

equitable under

these circumstances.

The district

court approved

the settlement.

The

claims against Longwood were tried to a jury which returned a

verdict

final

in favor of Longwood.

judgment dismissing

against

ordering

his wife,

Longwood,

The district

the

entering

action of

judgment

that Charles MacGlashing

$306,032.52 -- the

post-judgment interest

This appeal followed.

at the

the

against

MacGlashings

Dunlop,

and

recover $4,651,739.23 and

amount of the

rate

court issued a

of 5.86%

settlement plus

-- from

RPM.

III.
III.

STANDARD OF REVIEW
STANDARD OF REVIEW
__________________

We review

judgment

de novo
__ ____

favorable to

that

the district

and review

court's

the record

the nonmoving party, drawing

party's favor.

grant of

in the

summary

light most

all inferences in

Den Norske Bank AS v. First Nat'l Bank

_______________________________________

of Boston, 75 F.3d 49, 53

_________

(1st Cir. 1996); EEOC v. Green, 76

_____________

-99

F.3d

19, 23 (1st Cir. 1996).

record as it stood before

its

ruling."

"Our review is limited to the

the district court at the

J. Geils Band Employment Benefit Plan v. Smith

______________________________________________

Barney Shearson, Inc.,

_____________________

Summary judgment

76 F.3d 1245,

is proper

the affidavits, if any,

issue as to any

entitled to

1250 (1st Cir.

"if the pleadings,

answers to interrogatories, and

with

time of

1996).

depositions,

admissions on file, together

show that there

material fact and that

judgment as a matter

is no genuine

the moving party

of law."

Fed.

is

R. Civ. P.

56(c).

Allegations of a

an otherwise

factual dispute "will

not defeat

properly supported motion for summary judgment;

the requirement is that there be no genuine issue of material

fact."

Morrissey v. Boston Five Cents Sav. Bank, 54 F.3d 27,

________________________________________

30 (1st

Cir. 1995)(quoting Anderson v. Liberty Lobby, Inc.,

________________________________

477

U.S. 242, 247-48 (1986)).

Material facts are those that

have the potential to affect the outcome of a suit.

Band, 76 F.3d at
____

1250-51.

material facts are genuine

reasonable

party.'"

jury could

Morrissey, 54
_________

U.S. at 247-48).

Disputes

J. Geils
________

as to the existence

if "'the evidence is such

return

a verdict

F.3d at

for the

of

that a

nonmoving

30 (quoting

Anderson, 477
________

We must affirm the district

court's grant

of summary judgment "[i]f the

merely colorable,

or is

evidence [presented by RPM] is

not significantly probative."

We apply Massachusetts law.

-1010

IV.
IV.

Id.
___

DISCUSSION
DISCUSSION
__________

The

issue is

whether

the indemnification

clause

contained in the lease agreement RPM executed with Dunlop

enforceable and, if so,

whether its scope includes liability

for damages stemming from

as a

result of

obligated,

under

awarded the

the

accident.

Massachusetts

agreement,

Dunlop

alternative,

clause

the injuries MacGlashing sustained

RPM avers

law,

RPM

relieving

contained

argues

in

RPM

the

that even

that

to pay

MacGlashings because Dunlop

lease

indemnify

the

is

it is

the

judgment

materially breached

of

the

promise

agreement.

if

not

In

to

the

the indemnification

is valid, it should not be deemed responsible for the

particular claims

advanced by the MacGlashings

because they

fall outside the contemplated scope of the agreement.

Appellees contest

both

of these

arguments.

We

begin by addressing the enforceability of the lease agreement

and

then turn to a discussion of its scope.

Enforceability of the Lease Agreement's

Enforceability of the Lease Agreement's
_______________________________________
Indemnification Clause
Indemnification Clause
______________________

RPM

challenges

the

enforceability

of

the

indemnification clause by attacking the validity of the lease

agreement it executed with Dunlop.

See Kelly v. Dimeo, Inc.,

___ ____________________

31 Mass. App. Ct. 626, 628 (1991)("Under Massachusetts law, a

contract-based right to indemnification

is a

binding contract

exists only if there

between indemnitor and

indemnitee in

-1111

which such right is expressed or from which it

can be fairly

implied."), review denied, 412 Mass. 1102 (1992).

______ ______

RPM, using

the Uniform Commercial Code as its launching pad, argues that

the

indemnification clause

materially

breached

is unenforceable

implied warranties

see Mass. Gen. L. ch. 106,

because Dunlop

of merchantability,

2-314 (1990), and fitness for a

___

particular purpose,

(1990),

defective

by

see
___

providing

and

Mass.

RPM

unreasonably

Gen. L.

with work

ch.

106,

platforms

dangerous.

2-315

that

were

RPM asserts

that

because, under Massachusetts law, the MacGlashings would

have

been entitled

to

finding that the work

or unreasonably

implied

any recovery

in

the absence

of

platform Dunlop provided was defective

dangerous, Dunlop, ipso facto,

__________

warranties

not

of

merchantability and

breached the

fitness

for

particular purpose.

RPM,

in effect, attempts to

the MacGlashings against Dunlop as

use the tort claim of

a basis for its

argument

that Dunlop breached its implied warranty of merchantability.

But the contract between

property.

RPM

cannot use

RPM and Dunlop was for the lease of

the indemnity clause

to turn

an

economic contract into one based on tort concepts.

Massachusetts

argument.

distinction

law

It adopts the

between tort

contract recovery for

plainly

forecloses

majority view which

recovery

economic loss.

-1212

RPM's

draws a clear

for physical

injury and

See Jacobs v. Yamaha

___ _________________

Motor Corp., 420 Mass. 323, 329 n.5 (1995); Bay State-Spray &
___________
_________________

Provincetown S.S., Inc. v. Caterpillar Tractor Co., 404 Mass.

__________________________________________________

103, 107

(1988);

342,

(1989); Colter v. Barber-Greene Co., 403

____________________________

Correia v. Firestone Tire & Rubber Co.,

________________________________________

388 Mass.

356 (1983); Marcil v. John Deere Indus. Equip. Co., 9

________________________________________

Mass. App. Ct. 625,

630 (1980); see also Canal Elec. Co. v.

___ ____ ___________________

Westinghouse Elec. Co.,

______________________

973 F.2d 988,

Reibold v. Simon Aerials, 859

_________________________

1994).

Mass. 50

The rule

996 (1st Cir.

F. Supp. 193,

that the absence of

1992);

198 (E.D.

Va.

a showing of personal

injury, or of

physical damage to

contracting party

stemming from

415

Mass.

e.g.,
____

between

We

305

tort and

case.

(1993).

Attempts

rejected routinely.

as RPM

urges,

attempt

to

compensate the MacGlashings back

alleges no direct damage

415 Mass.

regard the

contract-based claims

RPM's

losses

is

to

"[c]ouching the allegations in terms

contract" have been

cannot,

the

Garweth Corp. v. Boston

________________________

FMR Corp. v. Boston Edison Co.,

________________________________

(1993).

this

303,

economic

liability or negligence

in Massachusetts.

circumvent this rule by

of breach of

recovery for

tort-based strict

well established

Edison Co.,
___________

forecloses

property belonging to

shift

as

the

See,
___

393, 394

difference

"irrelevant" in

obligation

to

to Dunlop fails because RPM

or injury to itself.

The argument

that

RPM

is

entitled

to

relief

from

the

contract

it

negotiated with Dunlop hinges entirely on the physical injury

its

employee,

Charles

MacGlashing,

sustained.

Compare
_______

-1313

Garweth,
_______

415 Mass. at 307.

RPM

has not made the showing of

injury or damage to itself as Massachusetts law requires.

Moreover, appellant

alleged

breach

of

the

has not convinced

lease

indemnification

clause

executed.

one-page contract

Dunlop

The

that the

underlying

alia, the
____

well

invalid, as

contains standard-form

suggest

lease.

if

it

rendered

the

had never

been

executed between

language

indemnity provision

and

RPM and

clauses

is separate

which

from the

The face of the agreement sets out, inter

_____

type and cost

as guidelines

agreement

us that the

of the equipment

for its installation

around the site, and expressly

to be leased,

as

and transportation

incorporates a July 21, 1993,

handwritten note regarding delivery,

assembly, and pickup of

the work platforms by Paul Haven, RPM's president.

The

reverse

side

of

seventeen numbered paragraphs

and

side

the

agreement

that outline lease

are clearly separated by spacing.

contains

conditions

Two of these reverse-

clauses concern responsibility for damages flowing from

the use of equipment referred to in the lease agreement.

first clause

under

provides that

the agreement

for

RPM assumes

damages,

full responsibility

injuries, and

caused by the use of Dunlop equipment and reads:

3.

Lessee

assumes

responsibility for
accidents
persons,
equipment

caused

the

full

damages, injuries and

resulting
by

to any
the

use

property or
of

said

while in the possession of the

lessee, from the

time of arrival at

-1414

The

the

accidents

above

named location, during the term of

lease, and until equipment is returned to

lessor.

The second

clause deals with

indemnification and is

one of

six written in boldfaced type. It provides that RPM

absolves

Dunlop of

any responsibility or

event of

accidents

resulting from

the use

obligation in the

of the

leased equipment,

regardless of cause or consequence and reads:

12.

THE

LESSEE

LESSOR

OF

OBLIGATION

HEREBY

ANY
IN

THE

ABSOLVES

THE

RESPONSIBILITY

OR

EVENT

OF

ACCIDENT,

REGARDLESS OF CAUSES OR CONSEQUENCES, AND

THAT

ANY

ATTORNEY'S

COSTS,

CLAIMS,

FEES, OR

AGAINST

WHOM

OR

LIABILITY RESULTING

FROM THE USE OF DESCRIBED

BE INDEMNIFIED BY

COURT

EQUIPMENT WILL

THE LESSEE

THE CLAIMANT

REGARDLESS
OR CLAIMANTS

INSTITUTE ACTION.

The standard form equipment sign-off sheets Paul Haven signed

on the 20th, 22nd, 23rd,

delivered

similar

"Dunlop,

the

work

language.

Inc.

is not

and 27th of July 1993, when

platforms

They

to the

provide

responsible

that

work

RPM

for any

site,

agrees

damages

Dunlop

contain

that:

to the

building, or any injuries or accidents resulting to people or

property caused from the use or misuse of this equipment."

Based on our

reading of the lease and the sign-off

sheets, we do not think RPM and Dunlop intended the covenants

contained

in

clause to be

Inc.,
____

the

lease agreement

dependent.

277 Mass.

423,

and

the indemnification

See Connolly v. Haines-CE Brook,

___ ______________________________

427

(1931)("[W]hether covenants

conditional is determined . . . by the

-1515

are

true intention of the

parties as expressed by the language

also 41
____

Am. Jur. 2d

of the contract."); see

___

17, at 358 (1995) ("Where the language

of the indemnity contract is neither technical nor ambiguous,

the

words

are

meaning.").

given

their legal,

Because the

right

natural,

of

platforms accrues as soon as there is

action on

and

ordinary

the

leased

a breach of its terms,

-- i.e., failure to deliver the equipment in a timely fashion

-- the right of action under the indemnity agreement does not

accrue until Dunlop makes payment to a third party or suffers

the loss addressed by the agreement.

at

349 (1995);

42 C.J.S.

2,

at 72-73

Restatement (Second) of Contracts

with the

district court

that

See 41 Am. Jur. 2d

___

(1991); see
___

379, comment a.

the better

and more

4,

also
____

We agree

logical

approach

is

independent

to

treat

the

indemnification

provision of the lease.

v. Nat'l Cash Register Corp.,

_____________________________

clause

as

an

See Chatlos Sys., Inc.

___ __________________

635 F.2d 1081,

1085 (3d Cir.

1980).

There is solid precedent

for our decision to treat

the indemnification clause as a separate agreement unaffected

by any breach of the lease contract.

See, e.g., Hill Constr.

___ ____ ____________

Corp. v. American Airlines, Inc., 996

__________________________________

1993)(carrier cargo liability

the agreement to carry cargo);

F.2d 1315

(1st Cir.

limitations survive breach

of

County of Middlesex v. Gewvyn

_____________________________

Constr. Corp., 450 F.2d 53 (1st Cir. 1971), cert. denied, 405
_____________
_____ ______

U.S.

955

(1972)

(arbitration

agreement

valid

despite

-1616

construction contract breach).

Massachusetts addressed

The Supreme Judicial Court of

the question of whether

contract undermines a consensual

breach of a

allocation of risk in Canal

_____

Elec. Co. v. Westinghouse Elec. Corp., 406 Mass. 369

_____________________________________

(1990).

That case

involved electric

utility companies which

sought

remedies for breach, under the UCC, for losses they allegedly

incurred

components

They

as the result of

supplied

sought to

be

by

the failure of electric generator

Westinghouse Electric

relieved

of

the

limits

Corporation.

on

indirect,

special, incidental, and consequential damages imposed by the

selling policies

to which

Supreme Judicial

Court held

were enforceable

even though Westinghouse's efforts

the

problems

created

by

they agreed.

Id.
___

that the liability

its

generator

at 371.

The

limitations

to cure

components

were

unsuccessful. Id. at 374-75.

___

This holding persuades us

in this case would be

that the course we adopt

followed by the Massachusetts

courts.

Under Massachusetts

contractual

Canal Elec.,
___________

law,

the

allocation

of

risk

through

agreements neither conflicts with public policy,

406 Mass.

at 372; Minassian v. Ogden Suffolk

____________________________

Downs, Inc., 400 Mass. 490, 493 (1987), nor the Massachusetts
___________

workers' compensation statute prohibition against an employee

receiving direct compensation for work-related

its employer.

injuries from

See Decker v. Black and Decker Mfg. Co., 389

___ _____________________________________

Mass. 35, 38 (1983); Whittle v. Pagani Bros. Constr. Co., 383

___________________________________

-1717

Mass.

796, 800 (1981); see also Mass.

___ ____

Gen. L. ch. 152,

23

(1988); Clarke v. Kentucky Fried Chicken of California, Inc.,

_____________________________________________________

57

F.3d

21, 24

workers'

where,

(1st

compensation

as

in

this

allocating risk are

Elec.,
_____

406

Mass. at

Cir.

1995)(describing provisions

statute).

case,

the

This

parties

is

especially

to

the

of

true

agreement

"sophisticated business entities." Canal

_____

374;

Deerskin Trading Post, Inc. v.

________________________________

Spencer Press, Inc., 398 Mass. 118, 123 (1986).

___________________

Risk

construction

"reasonable

agreement.

allocation

industry

agreements

and

are

accommodation" between

are

common

in

widely-regarded

parties to

as

the

a commercial

See Canal Elec., 406 Mass. at 374; Jones v. Vappi

___ ___________
______________

Co., 28 Mass. App. Ct. 77 (1989); see also Debra A. Perelman,

___
___ ____

Risk Allocation Through Indemnity Obligations In Constr.

_____________________________________________________________

Contracts, 40 S.C. Law.

_________

the

advantage

subcontractors

of

to

Rev. 989, 989-90 (1989).

allowing

shift

the

unforeseeable risks inherent

owners,

significant

They have

contractors,

and

and, oftentimes,

in construction work.

Cf. Hill
___ ____

Constr., 996 F.2d at 1317; Perelman, Risk Allocation, 40 S.C.

_______
_______________

Law. Rev. at 989-90.

They also permit the

equipment needed

to complete construction

jobs to be obtained

at lower rates

because the lessors of such equipment can exclude the cost of

insuring against accident-related damages from

price.

Cf. Hill Constr., 966 F.2d at 1317.

___ _____________

State Gas Co., 383

_______________

Mass.

218,

-1818

224

(1981),

the equipment

In Shea v. Bay
___________

the

Supreme

Judicial

Court

viewed, the

candidly

recognized

shift of liability is

that

"realistically

a shift in

the burden of

providing adequate insurance coverage."

Nothing in the record suggests that Dunlop acted in

bad faith,

see Mass.
___

Constr., 996 F.2d at

_______

an

1-203

(1990), Hill
____

hidden or buried

RPM to

deep in the

Compare Mobil Chemical Co. v. Blount Bros. Corp.,

_______ _________________________________________

F.2d 1175, 1182

liability

106

1317, or unfairly seeks to bind

indemnity clause which was

contract.

809

Gen. L. ch.

to

RPM

(5th Cir. 1987).

in

clear

and

Paragraph 12 shifts

unmistakable

language.

Additionally, the record makes it clear that RPM's president,

Paul Haven, a man

with more than twenty years

of experience

in the construction industry, knew or should have known about

the risk

allocation provisions

contained in

the agreement.

He negotiated the lease agreement and represented, in signing

it

on RPM's behalf, that

he had "read and

terms stated on

both sides of th[e]

acknowledgement

indemnity clauses

form."

lease agreement are standard

industry.

Cf.
___

parties

conclude

be

own

contained in

in the construction

Perelman, Risk Allocation, 40 S.C. Law. Rev.

_______________

989-90 (Indemnity

should

By Haven's

of the sort

the Dunlop

at

agree[d] to all

provisions

interpreted by

entering

that the

into

the

in construction

"recognizing

the

agreement.").

indemnity clause

contracts

intent of

We,

contained in

agreement RPM executed with Dunlop is enforceable.

the

therefore,

the lease

-1919

Scope of the Indemnification Clause

Scope of the Indemnification Clause
____________________________________
Under Massachusetts Law
Under Massachusetts Law
_______________________

In addition to attacking

indemnity

clause, RPM attacks

the enforceability of the

its scope.

It

argues that,

under

Massachusetts

law,

of the

the

agreement

term

"use"

12

liability

for claims brought on a theory of strict liability

See
___

read

in

paragraph

instead of negligence.

cannot be

contained

to include

Hayes v. Douglas Dynamics, Inc.,

_______________________________

F.3d 88, 88 n.1 (1st Cir. 1993) ("Under Massachusetts law,

the

theory

of

merchantability

breach

of

is basically

an

implied

the same

warranty

as strict

of

liability

theory in tort."), cert. denied, 114 S. Ct. 2133 (1994).

_____ ______

The

rule

that

strictly construed

in Massachusetts.

rule

indemnity

contracts

against the indemnitee

are

to

be

no longer obtains

See Whittle, 383 Mass. at 797.

___ _______

The modern

is that "'[c]ontracts of indemnity are to be fairly and

reasonably construed

in order to ascertain

the intention of

the

parties and

accomplished.'"

to

effectuate

the

Shea, 383 Mass.

____

purpose sought

at 222 (quoting

N.H. & H.R. Co. v. Walworth Co.,

__________________________________

340 Mass.

to

be

New York,
_________

1, 3

(1959).

Courts are expected to give effect to the parties' intentions

at

the time

meaning.

of the

agreement and

to give

them reasonable

Id.; see also Cohen v. Steve's Franchise Co., Inc.,

___ ___ ____ ____________________________________

927 F.2d 26, 28 (1st Cir. 1991); Polaroid, 416 Mass. at

________

Speers v. H.P. Hood, Inc.,

___________________________

22 Mass.

review denied, 398 Mass. 1105 (1986).

______ ______

-2020

App. Ct.

694;

598 (1986),

We

are not

impressed by

RPM's argument

indemnity

clause's failure to

liability

claims omits such claims from its scope.

clause

also fails to mention

negligence

undermines

significantly

because

the

there

contention

that

the omission

negligence

invalidates an

specifically refer

claims brought on

force

is

of

of

little

that the

to strict

That the

a theory of

RPM's

support

argument

for

specific reference

indemnity clause.

the

to

Massachusetts

cases such as Shea, 383 Mass.

____

indemnity provision may be

indemnitee's

statement

601.

relatively

read to cover situations

negligence

although

to that effect."

Where

the language

219-20, "teac[h] that . . . an

there

is

Speers, 22 Mass.
______

is broad and

clear, responsibility

for a

of [an]

no

explicit

App. Ct. 598,

the parties'

risk not

intent

expressly

mentioned in the indemnity clause may be properly placed with

the indemnitor.

Cf.
___

Shea, 383 Mass. at 224-25.

____

We have little doubt that the language contained in

the

indemnity clause

is

broad enough

to encompass

claims

brought on a theory of either negligence or strict liability.

First, we

do

not agree

allocating the risk

with

RPM that

private

of strict liability for

agreements

tort damages in

the circumstances presented here

thwart public policy.

agreements are reasonable accommodations in

industry

paragraph

context.

Second,

12 of the lease

the

Such

the construction

language

contained

in

agreement is broad and expansive.

-2121

It absolves Dunlop for

"any responsibility or obligation" in

the

event

of

an

accident,

"regardless

of

cause

or

consequences," stemming from the use of its equipment.

Similar

language

encompass indemnification

has

been

found

sufficient

to

obligations on claims brought on a

theory of strict liability.

See Beloit Power Sys., Inc. v.

___ ___________________________

Hess Oil Virgin Islands Corp., 757 F.2d 1427, 1428

______________________________

(3d Cir.

1985) ("agrees to indemnify and hold harmless seller from all

claims

by third

limitations

parties which

on seller's

extend beyond

liability");

the foregoing

Midland Ins. Co. v.

_____________________

Delta Lines, Inc., 530 F. Supp. 190 (1982)("all loss lessor .

_________________

. . may sustain

or suffer because

of . . .

the use of

the

equipment."); Mid-America Sprayers, Inc. v. U.S. Fire Ins.

_______________________________________________

Co., 8
___

Kan. App. 2d

obligation

equipment");

451, 454 (1983)("any

resulting

see also
___ ____

from

the

v. Steve's Franchise Co., Inc.,

_______________________________

interpreted a

Massachusetts

use

of

Berry v. V. Ponte & Sons,

__________________________

Super. 513, 517, cert. denied, 81 N.J.

____________

1991), we

responsibility or

271 (1979).

927 F.2d 26,

described

166 N.J.

In Cohen
_____

29 (1st

franchise agreement executed

Cir.

under

law and held that the language contained in an

indemnity clause was broad enough to cover both negligent and

nonnegligent

franchisor

liability

business

decisions.

to indemnify

Steve's

arising 'by

reason

The clause

Ice Cream,

of an

act

required the

Inc. "for

or omission

any

with

-2222

respect to the business or operation of the STEVE'S ICE CREAM

STORE . . . .'"

In

Inc., 416
____

that

an

Id. at 29.
___

Polaroid Corp. v. Rollins Envtl. Serv. (NJ),

_______________________________________________

Mass. 684 (1993), the Supreme

indemnity

clause

encompassed

Judicial Court held

claims

for

strict

liability, even though it did not explicitly provide

Polaroid involved an indemnity

________

clause for liability and loss

"for release or a substantial threat of

substances."

Id. at 686.
___

determination that

whom

they

executed

release of hazardous

The plaintiffs

the

in the case sought

hazardous waste

the

for it.

contracts

transporter with

containing

the

indemnification clauses, Rollins Environmental Services (NJ),

Inc., was obligated to

from

a spill

at a

language contained

part:

"You

harmless from

performed by

hereby

indemnify them against claims arising

hazardous waste

storage facility.

in the indemnity clause

agree

all liability

to indemnify

The

read in relevant

and

and loss arising

save

Polaroid

from services

you or your employees hereunder . . . ."

After

concluding

that the

prohibited

by CERCLA, 42 U.S.C.

that the

private indemnity

clause was broad

agreements

9607(e)(1), the court held

enough to cover

strict liability

for hazardous waste damage imposed under CERCLA.

this

conclusion, the

tort for

at the

court found

that strict

ultrahazardous activities existed

time the

parties entered

-2323

were not

In reaching

liability in

in Massachusetts

into their agreements

and

that

there was no outward

indemnitor to

limit its

manifestation on the

obligations under the

part of the

agreement to

negligence.

Moreover,

that the

all

paragraph 14

parties intended

liability

liability.

whether

Paragraph

insurance [Dunlop's]

cover

convinces us

the indemnity agreement

grounded

in

14 provides,

does not

your possession [RPM's]."

this that the

of the lease

negligence

in relevant

cover the equipment

to cover

or

strict

part, "Our

while in

It can be reasonably inferred from

parties intended RPM

to procure insurance

the burden it assumed under the indemnity clause.

to

Cf.
___

Speers, 22 Mass. App. Ct. at 601; see also Cohen, 927 F.2d at
______
___ ____ _____

29.

That RPM

whereas

Dunlop

contention.

(broad

carried

$5 million

carried

See
___

language

only

$1

in liability

million

Midland Insurance, 530

__________________

Supp. at

194

insurance is evidence of obligation to indemnify).

RPM gave

that it

only.

See
___

and

F.

this

increased

liability

agreement

supports

existence of

no indication

of

insurance,

intended to indemnify

Polaroid,
________

416 Mass.

contracting party's objective intention

for negligence

at

694

("[A]

dictates and a party

is bound by its outward manifestations to the other party.").

RPM cannot escape its obligations under the indemnity clause.

RPM's contention

conspicuous

and

cannot

that the indemnity

shift

liability

clause is not

for

defective

The

clause is

-2424

equipment does not deserve

printed

in

capital

extended comment.

letters.

ambiguous nor confusing.

Its

language

is

neither

The president of RPM testified that

he read

it and understood it.

At oral argument counsel for

RPM agreed that the lease was not a contract of adhesion.

We

on

the

end our analysis by noting

proposed

Dunlop, counsel

settlement between

that at the hearing

the

for RPM expressly approved

MacGlashings

and

the structure of

the settlement and stated that it was fair and equitable.

V.
V.

The judgments of the district court are affirmed.

The judgments of the district court are affirmed.
___________________________________________________

There will be added to the judgment amounts of $4,651,739.23

There will be added to the judgment amounts of $4,651,739.23
_____________________________________________________________

and $306,032.52 such additional post-judgment interest as is

and $306,032.52 such additional post-judgment interest as is
_____________________________________________________________

due.
due.
____

Costs on appeal awarded to appellees.

Costs on appeal awarded to appellees.
_____________________________________

-2525