Federal Insurance Company v. J.C. Higgins Corporation et al

Filing 160

Judge Rya W. Zobel: MEMORANDUM OF DECISION entered granting 138 Motion for partial Summary Judgment (Urso, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

CIVIL ACTION NO. 11-10452-RWZ

SIEMENS INDUSTRY, INC.
v.
EIRE ELECTRICAL CORP.

MEMORANDUM OF DECISION
November 28, 2012
ZOBEL, D.J.
This case against a series of subcontractors arose from damage caused by a
boiler malfunction. All claims have settled except for one by fourth-party plaintiff
Siemens Industry, Inc. (“Siemens”), against fourth-party defendant Eire Electrical Corp.
(“Eire”) for defense costs. Siemens has moved for partial summary judgment of liability.
I.

Legal Standard
Summary judgment will be granted if there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(a). The court must view the record in the light most favorable to the nonmoving
party, and draw all justifiable inferences in that party’s favor. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 255 (1986).
II.

Analysis
In 2009, the owner of the Center for Life Science building at Three Blackfan

Circle in Boston hired a general contractor to upgrade its boiler system. That general

contractor hired subcontractor J.C. Higgins Corp. (“Higgins”), which in turn hired
Siemens Building Technologies, Inc. (now Siemens), which in turn hired Eire to install
and wire certain components as part of the boiler system. In 2010, the boiler
malfunctioned. The building’s insurer, exercising its subrogation rights, brought suit
against Higgins as well as other defendants; Higgins impleaded Siemens, which
impleaded Eire. The entire action has now settled, except for Siemens’ claim against
Eire for defense costs.
The contract between Siemens and Eire contained the following defense and
indemnification clause, abbreviated to the provisions relevant here:
Subcontractor [Eire] shall indemnify, defend, and hold Contractor [Siemens]
harmless from any and all . . . costs of defense and settlement, arising out of or
relating to any and all claims . . . to the extent arising, in whole or in part, out of
any . . . improper, substandard, or inadequate performance or non-performance
of this Subcontract . . . or . . . any negligent or wrongful act or omission of the
Subcontractor . . . .
Siemens contends that this clause requires Eire to defend against any claims where the
complaint alleges deficient performance attributable to Eire. Eire, on the other hand,
asserts the clause only requires it to defend upon a factual showing that Eire’s deficient
performance or negligence actually caused the damages at issue. In other words,
Siemens believes the contract covers all claims alleged to arise from Eire’s mistakes,
while Eire believes it covers only harms actually caused by Eire’s mistakes.
Siemens’ position is correct. The plain language of the contract extends Eire’s
duty to defend to all “claims” that “aris[e], in whole or in part, out of” deficient
performance by Eire. In this context, a “claim” is defined as “[t]he assertion of an
existing right” or a “demand for money, property, or a legal remedy to which one

asserts a right.” Black’s Law Dictionary 264 (8th ed. 2004); see Siebe, Inc. v. Louis M.
Gerson Co., 908 N.E.2d 819, 826 (Mass. App. Ct. 2009). An “assertion,” in turn, means
an “allegation.” Black’s Law Dictionary 124 (8th ed. 2004); Siebe, 908 N.E.2d at 826.
As such, an obligation to defend against all claims requires Eire to defend upon any
allegation of deficient performance, not only upon proof of deficient performance.1
The Massachusetts Appeals Court reached the same conclusion in a similar
recent case. See Siebe, 908 N.E.2d 819.2 In that case, the court considered a contract
requiring a manufacturer to “defend, indemnify and hold harmless [a distributor] . . .
against all claims . . . arising out of” breach of the product’s warranties. It held that the
contract unambiguously required the manufacturer to defend against claims that
alleged defects in the products, even if those claims were not proven. Id. at 826-27.
The court further concluded that the duty to defend applied even where the underlying
complaint did not specifically allege breach of the product’s warranties, because the
complaint could “reasonably be interpreted” to bring claims “potentially within the
coverage of the provisions at issue.” Id. at 829.3

1

Eire pointed out at oral argument that its duty to defend and its duty to
indemnify are contained in the same clause. It argued that because the duty to
indemnify requires proof of causation, see Johnson v. Modern Continental Constr. Co.,
731 N.E.2d 96, 99 (Mass. App. Ct. 2000), the duty to defend should also require proof
of causation. That argument was implicitly rejected in Siebe, and remains unavailing.
See 908 N.E.2d at 826 & n.16.
2

The court in Siebe applied Rhode Island law, which it noted “does not differ in
material respect from Massachusetts law.” Id. at 824.
3

The court indicated that this broad test, which it derived from the insurance
context, might not apply to some commercial contracts. See id. at 829. However, it
found that no special factors existed in the case before it that would make the
application of insurance principles inappropriate. Id. Likewise, the parties in this case
have not indicated any factors that would distinguish the present dispute from Siebe or

Eire conceded at oral argument that the complaint’s allegations implicate its
work in installing and wiring certain components of the boiler system. Eire therefore
owes Siemens a defense to the extent that the complaint alleges faulty work
attributable to Eire.
III.

Conclusion
Siemens’ motion for partial summary judgment (Docket # 138) is ALLOWED.

November 28, 2012
DATE

/s/Rya W. Zobel
RYA W. ZOBEL
UNITED STATES DISTRICT JUDGE

make the application of insurance principles inappropriate.