Massachusetts Supreme Judicial Court Ruling Impacts Contractual Indemnification Claims

More than 12 years ago, in June of 2012, a local university executed a design contract with an architect to design a new synthetic turf athletic field on top of a parking structure. The architect prepared the design, the field was constructed, and the university hosted its first sporting event at the field in August of 2013.

Unfortunately, the university allegedly experienced issues with the field almost immediately. The university attributed these issues to the architect’s allegedly defective/negligent design of the field. In particular, the university asserted that the architect had failed to account for seasonal expansion of the parking structure underneath the field, which resulted in “depressions” in the field that made it “unsafe” and unusable for athletic events. The university incurred costs to address the alleged design defects and make the field usable. Then, more than six years after it first started using the field, the university filed a court action against the architect to recover its damages caused by the allegedly defective/negligent design.

The architect raised the Massachusetts statute of repose as a defense, arguing that the university filed its court action too late. In this regard, the statute of repose provides that “in no event” shall “[a]ction[s] of tort for damages arising out of any deficiency or neglect in the design, planning, construction, or general administration of an improvement to real property . . . be commenced more than six years after the earlier of the dates of: (1) the opening of the improvement to use; or (2) substantial completion of the improvement and the taking of possession for occupancy by the owner.”  According to the architect, the university contended that the architect had negligently prepared a defective design. Therefore, the university was required to file its court action within six years after first using the field under the statute of repose applicable to negligence claims. The architect lost.

In an April 16, 2025 decision, the Massachusetts highest court – the Supreme Judicial Court (“SJC”) – ruled that the statute of repose did not bar the university’s claim. The reason is because the university asserted a contract claim, not a negligence or “tort” claim. As is common in construction and design contracts, the parties had negotiated an express indemnification provision in their contract in which the architect explicitly agreed to indemnify the university for “any and all” expenses – including “reasonable attorney’s fees” – to the extent caused by the architect’s “negligence.” When the university demanded that the architect perform its contractual indemnification obligations, the architect declined. This was the alleged breach of the contractual indemnification provision that gave rise to the university’s breach of contract claim.

The fact that the indemnification provision explicitly used the term “negligence” did not mean that the university’s claim was actually a “negligence” claim within the scope of the statute of repose. As the SJC noted, the elements of a negligence claim are different from the elements of a contract claim. To prevail on a negligence claim, the university would have had to establish a legal duty, breach of that duty, causation, and damages. However, with respect to its claim for breach of the indemnification provision, the university would need to prove the following elements: (1) the existence of a valid and enforceable indemnification clause; (2) the occurrence of an event triggering the duty to indemnify; (3) adequate notice to the architect; and (4) the architect’s failure to fulfill its obligation specification in the indemnification clause.  Thus, the SJC stated: “[a]ccordingly, the university’s claim is contractual in nature, and the tort statute of repose does not bar it.”

The decision reflects the fact that Massachusetts courts will often embrace a “freedom of contracting” approach. That is, where – as here – sophisticated parties “specifically negotiated” and “freely and intelligently entered into a contract of indemnification” the SJC ruled that “[t]hey should be held to it.” Massachusetts courts aim to enforce the terms of a contract in accordance with its plain meaning, and typically will not step in to protect a party that may have made a poor deal for itself.  Highlighting the differences between a negligence claim and a contract claim, the SJC noted that the architect had actually agreed by contract to take on more liability than would have been imposed on it by law had it faced a negligence claim. That is, under the “American Rule,” litigants typically cannot recover attorneys’ fees absent statutory or contractual authority. As a result, if the university had attempted to litigate a negligence claim, the university could not have reasonably expected to recover its attorneys’ fees. But here, the architect explicitly agreed to take on liability for and cover the university’s “‘reasonable attorney’s fees’ in addition to the university’s expenses incurred to fix the field” by agreeing to the indemnification provision of the contract. As a result, the architect’s “duty to indemnify the university” for negligence was “not one imposed by law” but “rather, [was] a promise to which [the architect] freely and intelligently chose to be bound.” In other words, it was the duty under the contract that gave rise to the university’s claim against the architect.  If the architect had not agreed to the indemnification provision, the outcome in this case might have been different and its statute of repose defense may have been successful.

The case illustrates just one of the multitude of issues that can arise in the context of indemnification. Indemnification provisions are among the most hotly negotiated provisions in design and construction contracts. Indemnification obligations can take many forms, ranging from extremely broad in some cases, to very narrow in others. Sometimes, indemnification obligations are coupled with defense and hold harmless provisions. Regardless, contractors need to carefully examine proposed indemnification obligations, consider and understand the potential ramifications, and revise them appropriately to suit the risks of a given project.  Contractors are well advised to make sure that their insurance broker reviews proposed indemnification provisions and provide appropriate insurance coverage. In addition, contractors/suppliers/vendors at any tier need to be sure that they are appropriately flowing down indemnification obligations to others at lower tiers to ensure that there are no “scope gaps” when it comes to indemnification. Failure to do so could lead to the untenable position of having to indemnify up-the-chain without the benefit of receiving indemnification from down-the-chain. In addition, light of the SJC’s decision in this case, parties will likely consider adding proposed time limitations on contractual indemnification obligations. Otherwise, open ended indemnification provisions could arguably give rise to contract-based indemnity actions asserted years after project completion. We suggest that you review your contracts, subcontracts, and purchase orders with a careful eye towards identifying potential long-term and costly obligations.

UCANE Construction Outlook, May 2025  |  Legal Corner