Philadelphia Indemnity Insurance Company v. Consigli Construction Company, Inc. et al

Filing 142

Judge Mark L. Wolf: MEMORANDUM & ORDER entered granting 77 Motion for Partial Summary Judgment; granting 80 Motion for Partial Summary Judgment; granting 84 Motion for Partial Summary Judgment; adopting in part and modifying in part Report and Recommendations re 126 Report and Recommendations. (Bono, Christine)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
PHILADELPHIA INDEMNITY INSURANCE

COMPANY,
Plaintiff

V.

C.A. No. 14-14687-MLW

CONSIGLI CONSTRUCTION COMPANY, INC.,
THE ARCHITECTURAL TEAM, INC.,
SAGAMORE PLUMBING & HEATING, INC.,

CENTRAL CEILINGS, INC., and STOCK
BUILDING SUPPLY, LLC,
Defendants.

and

CONSIGLI CONSTRUCTION COMPANY, INC.,

Defendant/ Third-Party
Plaintiff

V.

CENTRAL CEILINGS, INC.,

Third-Party Defendant

MEMORANDUM AND ORDER

WOLF, D.J.

March 22, 2017

In a December 8, 2016 Report and Recommendations (the "R &

R") the Magistrate Judge recommended that the court: (1) retain

jurisdiction of defendant Consigli Construction Company, Inc.'s
("Consigli") claims against Central Ceilings Inc. ("Central")/

Sagamore Plumbing & Heating, Inc. ("Sagamore"), and Stock Building

Supply, LLC. ("Stock"); and (2) grant partial summary judgment

ordering Central and Sagamore, but not Stock, to defend plaintiff
Philadelphia

Indemnity

Insurance

Company's

("Philadelphia

Indemnity") claims against Consigli.

Consigli,

Central,

and

Sagamore

filed

objections to the

Report and Recommendation, in part based on the proposed finding
that Stock does not have a duty to defend the claims against

Consigli. Stock replied to those objections. Consigli also replied
to certain objections.

The court has reviewed ^ novo the parts of the Magistrate

Judge's recommendation to which a proper objection has been filed.
See

F.R.Civ.P.

72(b)(3).

The

court

finds

the

Report

and

Recommendation to be properly reasoned and persuasive except with

regard to the proposed denial of Consigli's motion for partial
summary judgment seeking an order that Stock defend Philadelphia
Indemnity's claims against Consigli. Therefore, the court is

granting Consigli's motions for partial summary judgment against
Central, Stock, and Sagamore.

No

party

has

objected

to

the

Magistrate

Judge's

recommendation that despite the identical forum selection clauses
in each relevant contract: this court has jurisdiction concerning

Consigli's claims against Sagamore, Central, and Stock; the court
has the discretion to require that these claims be litigated in

this case; and that the court should exercise that discretion to

do so. In any event, the Magistrate Judge's interpretation of the
law on these issues is correct and her reasoning is persuasive.
See e.g. Barletta Heavy Div., Inc. v. Erie Interstate Contractors,

Inc., 677 F. Supp. 2d 373, 378 (D.Mass.2009); Silva v. Encyclopedia
Britannica Inc., 239 F.3d 385, 388 n.6 (1st Cir. 2001).

Upon ^ novo review, the court finds the Magistrate Judge's
analysis to be correct concerning the duty of Central and Sagamore

to defend Consigli with regard to Philadelphia Indemnity's claims

against it. The Report and Recommendation on these issues is,
therefore, being adopted.

The court finds, however, that the Magistrate Judge made an
error of law that contributed to her recommendation that this court
should find that Stock does not also have a duty to defend. The

identical subcontract agreements in this case each, in pertinent

part, require the subcontractor to "defend...the Contractor from

any and all claims...and causes of action by any party arising out
of...the Subcontractor's work." Docket No. 116, Exhibit 1, Article
4A.

The Magistrate Judge correctly concluded that a duty to defend
is distinct from a duty to indemnify and requires that a defense

be provided when a covered claim is made. See Miley v. Johnson &
Johnson Orthopaedics, Inc., 41 Mass. App. Ct. 30, 34 (1996); Urban

Inv. & Dev. Co., 35 Mass. App. Ct. 100, 107 (1993). In addition,

the Magistrate Judge rightly recognized that whether a claim is
covered by a duty to defend clause is determined by reference to
the allegations in the complaint. See Siebe, Inc. v. Louis M.
Gerson Co., Inc., 74 Mass. App.Ct. 544, 552-553(2009).

The

Magistrate

Judge

erred,

however,

in

evaluating

the

reasonableness of the allegations against Stock and, in effect,

finding them implausible. Stock was allegedly responsible for the
"rough framing" work done on the building at issue, in which water

pipes burst and caused substantial damage. In recommending that
Stock does not have a duty to defend Consigli against Philadelphia
Indemnity's claims, the Magistrate Judge wrote:
There are no allegations describing how the rough

framing work led to the negligent installation of
plumbing or insulation at the Property or otherwise
caused the pipes to freeze. As Stock argued in its

papers, "[e]ven with a layperson's understanding of
sequencing work, a subcontractor performing rough
framing would not even have the opportunity to see
how the water piping was installed as the former
would be completed before the latter work started."
Without some indication as to how Stock Building's
actions related to Plaintiff's losses, the Second

Amended Complaint cannot reasonably be construed as
giving rise to a duty by Stock Building to defend
Consigli in this case.

R & R at 23. (internal citation to the record omitted.)

In reaching this conclusion, the Magistrate Judge evidently
construed the standard for determining whether a duty to defend

exists to be comparable to the standard for granting a motion to
4

dismiss

under

Federal

Rule

of

Civil

Procedure

12(b)(6),

which

requires that the facts alleged state a claim that is plausible
rather than merely possible. See Bell Atlantic Corp. v. Twombly^
550 U.S. 544, 555, 557 (2007); Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009). In doing so, the Magistrate Judge misconstrued, or

misapplied, the reasonableness test concerning the duty to defend.
As explained in the analogous context of an insurance company's

duty to defend, "[i]t is settled [law] in [Massachusetts] that the
question of the initial duty...to defend...is decided by matching
the third-party complaint with the policy provisions: if the

allegations in the complaint are 'reasonably susceptible' of an
interpretation that they state or adumbrate a claim covered by the
policy terms," a

duty to defend exists.

Sterilite

Corp.

v.

Continental Cas. Co., 17 Mass.App.Ct. 316, 318 (1983).

In 2010, the Massachusetts Supreme Judicial Court re-affirmed
and amplified this principle, writing that:
An insurer has a duty to defend an insured when the

allegations

in

a

complaint

are

reasonably

susceptible of an interpretation that states or

roughly sketches a claim covered by the policy
terms. Ruggerio Ambulance Serv., Inc. v. National
Grange Mut. Ins. Co., 430 Mass. 794, 796, 724 N.E.2d
295 (2000). The duty to defend is determined based
on the facts alleged in the complaint, and on facts
known or readily knowable by the insurer that may
aid in its interpretation of the allegations in the
complaint. See Boston Symphony Orchestra, Inc. v.
Commercial Union Ins. Co., 406 Mass. 7, 10-11, 545
N.E.2d 1156 (1989); Desrosiers v. Royal Ins. Co.,

393 Mass. 37, 40, 468 N.E.2d 625 (1984). "In order

for the duty of defense to arise, the underlying
complaint
need
only
show,
through
general
allegations, a possibility that the liability claim
falls within the insurance coverage. There is no

requirement that the facts alleged in the complaint
specifically and unequivocally make out a claim
within
the
coverage."
Sterilite
Corp.
v.
Continental Cas. Co., 17 Mass.App.Ct. 316 at 319,

quoting Union Mut. Fire Ins. Co. v. Topsham, 441
A.2d 1012, 1015 (Me.1982).

Billings v. Commerce Insurance Company, 458 Mass. 194, 200 (2010).

Applying these principles to the allegations in the Complaint, the
Court held that, "[t]he fact that the complaint in the 2000 action
did not state a claim for defamation, libel, or slander is not

decisive in determining whether it is reasonably susceptible to an

interpretation that states or roughly sketches a claim for damages
because of 'personal injury' arising from 'libel, slander or
defamation of character.'" Id. at 201. Therefore, in Billings the

Supreme Judicial Court confirmed that the duty to defend exists if
the allegations of the complaint create a reasonable possibility
that coverage exists for a particular claim and that duty must be

discharged even if the complaint fails to state a claim on which
relief could be granted because the allegations are deemed by the
court to be implausible or unreasonable. See also Siebe, 74 Mass.

App.Ct. at 553-554(using Massachusetts law to interpret Rhode
Island law because both apply the "pleadings test" to determine if
there is a duty to defend, and stating that "[t]he obligation to

defend exists even though the claim against the insured appears to
lack merit...").

As explained earlier, in this case the applicable indemnity

clause requires Stock to "defend... [Consigli] from any and all
claims...and
of...[Stock's]

Philadelphia

causes

of

work."

action
Docket

Indemnity's

by

any

No.116,

Second

party

Ex.

Amended

1,

arising

out

Article

4A.

Complaint

against

Consigli, Stock, and Central alleges, in pertinent part, that:
95. At all times material hereto, defendant Stock

acted through its duly authorized agents, servants

and employees and therefore is vicariously liable
for their actions and inactions.

96. Defendant Stock was a subcontractor responsible

for, among other things, the installation of rough
framing as part of the construction of the
condominiums at the Property.

97. Defendant Stock had a duty to exercise
reasonable care in its construction activities

during the construction of the condominiums at the
Property including the installation of rough
framing to ensure that the water piping in the
Property was reasonably safe for its intended use
and was not exposed to freezing temperatures.

98. Defendant Stock breached its duty by failing to
exercise reasonable care in its construction

activities

at

the

Property

to

ensure

that

its

framing work did not leave water supply piping
exposed to freezing temperatures.

99.

The

aforesaid

negligence,

carelessness,

recklessness and negligent acts and/or omissions of
defendant Stock were the direct and proximate cause

of the January 24, 2014 pipe freeze up and resulting
damages sustained by plaintiff's insured.

ICQ.

As

a

direct

and

proximate

result

of

the

negligence of defendant Stock, plaintiff's insured
suffered significant water damage to its Property
for which plaintiff, Philadelphia, has made, and
will make, payments to its insured.

These allegations state a claim based on Stock's alleged work
for which Consigli, as the General Contractor, and Stock, as

subcontractor, could possibly be held jointly liable. They

are squarely covered by the indemnity clause. Therefore, the

"reasonable susceptibility" test is not relevant in this

case. In any event, that test does not provide the court the

authority

to

evaluate

the

reasonableness,

or

the

plausibility, of the allegations in deciding whether Stock
has a duty to defend Consigli.

Moreover, it is not evident to this court that the claim
that Stock's "rough framing" work, if performed negligently,
could not have caused or contributed to the pipes freezing

and bursting. Stock did not file a motion to dismiss or motion
for summary judgment on this issue. There is no record from
which a court could properly find that Stock's work could not
have contributed to the pipes bursting, and this factual issue

8

is not a

proper

subject for judicial notice.

See, e.g.,

F.R.Ev. 201(b) ("The court may judicially notice a fact that

is not subject to reasonable dispute because it: (1) is

generally

known

within

the

trial

court's

territorial

jurisdiction; or (2) can be accurately and readily determined
from

sources

whose

accuracy

cannot

reasonably

be

questioned.").

In any event, as explained earlier, the duty to defend
exists even if allegations fail to state a claim for which
relief can be granted. See Billings, 458 Mass, at 201. Because

the claims against Consigli arising out of Stock's allegedly

negligent work are covered by the indemnity clause in the

agreement between them, Consigli's request that Stock be
ordered

to defend

Philadelphia

Indemnity's

claim

against

Consigli is meritorious.

In view of the foregoing, it is hereby ORDERED that:

1. The Report and Recommendation (Docket No. 126) is
ADOPTED in part and MODIFIED in part.

2.

Consigli's

motions

for

partial

summary

judgment

requesting that Central (Docket No. 77), Stock (Docket No.
80) and Sagamore (Docket No. 84) be ordered to defend Consigli
in this action are each ALLOWED.

3.

Central,

Stock,

and

Sagamore

shall

provide

such

defense of Consigli forthwith.

4. The parties shall confer and in the report previously

ordered by the Magistrate Judge to be filed by June 9, 2017,
see

Docket

No.

141,

state

whether,

if

this

case

is

not

settled, they agree to have it reassigned to the Magistrate
Judge for all purposes, including trial.

UNITED STATES DISTRICT JUDGE

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