Inside this Issue

A1 - Breach of Contract Statute of Limitations Applies to Indemnification Litigation
A2 - Homeowner Couldn’t Claim Consequential Damages against Builder in New York
A3 - Contractor not Required to Remediate Hazardous Environmental Conditions that Weren’t Disclosed by Project Owner

Article 1

Breach of Contract Statute of Limitations Applies to Indemnification Litigation

In a decision by the Massachusetts Supreme Judicial Court (SJC), it was held that the tort statute of repose that sets a time bar for filing tort actions for damages arising out of design defects was not applicable to a project owner claim against a design firm based on the indemnification clause of the contract. The court held this was a breach of contract action not subject to the statute of repose that applies only to tort claims. This case demonstrates the importance of exercising caution when agreeing to indemnity clauses in contracts. Trustees of Boston University v. Clough, Harbour & Associates LLP, 495 Mass. 682 (2025).

The defendant, Clough, Harbour & Associates LLP (CHA or architect), designed a new athletic field for theUniversity. The contract contained an indemnification clause that; “To the fullest extent permitted by law, [CHA] shallindemnify ... [the university] ... from and against any and all ... expenses, including, but not limited to, reasonable attorney's fees, to the extent caused ... by the negligence of [CHA].” Due to a defect in the design, the university incurred expenses to render its new field usable. Pursuant to the indemnification provision, the university submittedthe bill for its expenses to the designer; The designer declined to pay and the university filed suit against it more than six (6) years after the field opened for use.

In the trial court, CHA moved for summary judgment which the court grated. The designer argued that the tort statuteof repose operates to bar the university's indemnification claim, which indisputably was filed more than six years afterthe opening of the athletic field, because, although the claim ostensibly is based in the parties’ contract, the contractual provision requires CHA to indemnify the university for CHA's negligence, and a negligence action is itself an action in tort.

By the statute's plain terms, the tort statute of repose “does not apply to contract actions.” The court stated,

“A key difference between an action in tort and an action in contract is that in the latter, ‘the standard of performance is set by the defendants’ promises, rather than imposed by law.’” The court compared breach of warranty claims that are not precluded by the tort statute of repose. “Thus, we have determined that the tort statute of repose applies to a claim for breach of an implied warranty, where the duty is imposed by law and “the elements for breach of implied warranty and for negligence claims are the same,” (citation omitted, but does not apply to a claim for breach of an express warranty where the duty arises from a contracting party's express agreement to guarantee a particular result.”

Later in the decision the court further explained that it had considered a situation it deemed similar to this in previous case where a mall owner sued an architect to enforce an indemnification clause long after the tort statute of repose had passed. In that case a mall patron sued the owner for negligence based on the mall’s design. The court looked at the indemnity provision in that case and concluded that it was grounded in the contractual indemnification provision even though the underling mall patron’s claim was for negligence. The court there concluded that “[t]he parties freely andintelligently entered into a contract of indemnification. They should be held to it.”

“Similarly, here, the gist of the university's action is “essentially contractual—theenforcement of a contract of indemnification.” Id. In section 10.10 of the parties’ contract, CHAexpressly promised to indemnify the university if it suffered any expenses due to CHA's negligence.(citation omitted). CHA's duty to indemnify the university for CHA's negligence is not one imposedby law; rather, it is a promise to which CHA freely and intelligently chose to be bound.”

Finally, the court explained that “To prevail on its [indemnification] claim, the university must shown the existence of a valid and enforceable indemnification clause, the occurrence of an event triggering the duty to indemnify, the provisions of adequate notice to the indemnitor, and the failure of the indemnitor to fulfill its obligation as specified in the indemnification clause.” Having found the university’s claim to be contractual in nature, the court held that the tort statute of repose did not bar this claim.

Comment: I understand the concerns raised by some commentators about this court decision. I, however, believe contracts between sophisticated parties should be enforced by courts as written, and in this case, I think the court has explained well its reasoning for enforcing the indemnity clause.

Contractual indemnity obligations are created by contract and create cause of action for the Indemnified party that is separate from a tort cause of action that party might be able to bring against the designer. This is one reason that I believe parties should be warry of indemnity clauses in their contracts.

Another concern with the clause in this case is that it created a cause of action for the owner to make first party damages claims against the designer even if no third-party claim for damages had been made against the owner. When our consulting firm reviews contracts, we like to revise the indemnity wording to clearly state that the indemnity is only for damages resulting from third party claims against the indemnitee. Some states read indemnity clauses to be limited in that manner anyway. But courts in other states will allow the indemnity clause to be used to recover first party damages unless expressly clarified to be only for damages resulting from third party claims.

About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 27, No. 5 (July 2025).

Article 2

Homeowner Couldn’t Claim Consequential Damages against Builder in New York

See similar articles: Consequential Damages

Consequential damages weren’t contemplated when a homeowner executed a contract with a builder to reroof a residence. While work was being performed a storm occurred and caused water damage to the attic. The homeowner sued the builder, and after discovery was completed, it sought additional damages from “project delays and the increase in mortgage interest rates, material and construction costs,” etc. The builder filed a motion to preclude evidence showing these “consequential damages”. The court granted the motion, and this was affirmed on appeal because the courts concluded that consequential damages were not contemplated by the parties when the contract was executed. New York law holds that “In an action seeking damages for breach of contract, a party’s recovery is ordinarily limited to general damages which are the natural and probable consequence of the breach”. James Vermillion v. The Roofing Guys, Inc., 374 CA 24-00258 – Supreme Ct. of NY, App.Div., 4^th Judicial Dept. (2025).

In further explanation for its short decision the court stated:

“To determine whether consequential damages were reasonably

contemplated by the parties, courts must look to the nature, purpose

and particular circumstances of the contract known by the parties

. . . as well as what liability the defendant fairly may be supposed

to have assumed consciously, or to have warranted the plaintiff

reasonably to suppose that it assumed, when the contract was made”

(citations omitted). Here, plaintiff entered into a “bare bones” contract with

defendant to tear off the roof of the residence, replace all rotted

plywood, re-lay architectural shingles, and remove all roofing debris.

Inasmuch as the contract makes no mention of consequential damages and

contains nothing that could be interpreted as contemplating

consequential damages, and no party testified that consequential

damages were contemplated when the contract was entered, the court

properly precluded testimony or proof of consequential damages.”

Article 3

Contractor not Required to Remediate Hazardous Environmental Conditions that Weren’t Disclosed by Project Owner

See similar articles: Hazardous Conditions

A project owner attempted to require a contractor to dispose of hazardous levels of PCBs the contractor removed from the interior of standpipes it was working on. After having completed its work of blasting and repainting the interior of the standpipe, the contractor learned that paint chip samples tested positive for hazardous level of PCBs. It notified the Owner of the testing results and took various actions, including stopping the transfer of the hazardous waste to a landfill and returning it to the worksite and confining its contaminated equipment. The Owner then stated that the contractor was responsible for disposing of the waste and completing any necessary remediation. The Contractor disagreed and replied that the PCB-laden chip waste from the interior of the standpipe was an unanticipated hazardous environmental condition that was not expressly identified in the contract as being within the scope of the work and, thus, Owner was responsible for remediation. When the contractor ceased performing work, the Owner filed suit for breach of contract. Summary judgment was granted to the contractor and affirmed on appeal, with the courts finding that the contractor was entitled to rely upon the accuracy of the site data provided by the Owner regarding the presence of environmental hazards. That data showed only low levels of lead-based paint and PCBs on the exterior of the pipe and no reference to the interior of the pipe. Because the PCBs on the interior of the pipe were not expressly identified by the Owner the Contractor was entitled to summary judgment. Town of Colonie v. Global Contracting & Painting, Inc., 237 A.D. 3d 1280 (2025).

The court explained as follows:

“Initially, we agree with Supreme Court that the terms of the contract concerning hazardous conditions present at the project site are unambiguous. As relevant here, the contract required Global to “abate lead-based paint ... and PCB containing paint on all of the exterior surfaces” of the standpipe and ancillary equipment, and to comply with federal regulations “during the removal of the coating system (paint) on the exterior of the [standpipe].” Further references regarding acceptable removal and abatement methods and requirements, again, solely concerned the standpipe's “exterior.” Global would not be held responsible “for removing or remediating any Hazardous Environmental Conditionencountered, uncovered, or revealed at the [s]ite unless such removal or remediation is expressly identified in the [c]ontract [d]ocuments to be within the scope of the [w]ork.” To this end, the parties’ agreement provided that Global was permitted to “rely upon the accuracy of the [t]echnical [d]ata expressly identified” by plaintiffs regarding the presence of environmental hazards.”

“Affording the terms of the contract “their plain and ordinary meaning”), we find thatGlobal met its initial burden on summary judgment on this issue, as its submissions indicate that the presence of PCBs in the interior of the standpipe was not “expressly identified” in the information provided by plaintiffs.”

Comment: It is unfortunate that project owners seem to be attempting to restrict or even eliminate the ability of contractors and designers to rely upon information, documentation and site data provided by the Owner. We are seeing contracts stating that no reliance is allowed whatsoever. We are seeing contracts stating that soil borings and other site data provided to bidders is only for general information and that instead of relying on that data, the bidders are required to do their own “inspections” and “investigations” before bidding. When we see such clauses, we attempt to negotiate something more reasonable. We will, for example, attempt to add a clause clarifying that any pre-bid inspections and investigations done by the designer or contractor will not include “subsurface or intrusive investigation.” Another idea is that instead of allowing the contractors and designers absolute reliance on data provided by the Owner, the clause can be revised to state that it must be “reasonable” reliance or that the contractors and designers must exercise reasonable care in relying on such data.

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