Tuesday, November 10, 2009

Massachusetts Appeals Court interprets insurance requirement in construction subcontract

In RCS Group, Inc. v. Lamonica Constr., Inc., 75 Mass. App. Ct. 613 (2009), the Massachusetts Appeals Court interpreted an insurance requirement in a construction contract between general contractor RCS and subcontractor Lamonica. The contract required that

[Lamonica] shall maintain, at its own cost, such insurance as will protect it and [RCS] from . . . any claim for bodily injury, including death, and whether such [w]ork or performance are by [Lamonica] or any of [its] subcontractors or any one directly or indirectly employed by [it] . . .

Lamonica obtained insurance but did not include RCS Group as an additional insured on its policy. When an employee of Lamonica's was injured and sued RCS, RCS sued Lamonica for breach of contract.

The court held that the insurance provision did not require that Lamonica name RCS as an additional insured on its insurance policy, on the grounds that the provision was ambiguous and must be interpreted against RCS as the drafter of the contract.

The court noted that the insurance clause followed an indemnity provision in the subcontract that the court had previously ruled unenforceable. The court stated:

Had the indemnification provision been valid, as the parties intended, then liability insurance purchased in Lamonica's own name would have "protected" RCS Group fully so long as it covered Lamonica's indemnification obligations (as the insurance contract purchased by Lamonica in fact did). When examined in this context, the parties easily could have viewed the insurance policy that Lamonica purchased as one that would "protect" RCS Group, even though the policy did not include RCS Group as an additional insured.

No comments: