MOHAMMAD GHORY vs. SEARS HOME IMPROVEMENT and another [Note 1]

COVEN, P.J. We examine in this appeal the defense and indemnity provisions of an independent contractor agreement between John P. Sostilio ("Sostilio"), a plumbing contractor, and Sears Home Improvement Products ("SHIP"), [Note 3] in the context of a claim brought by a homeowner for a water boiler installation performed by Sostilio on behalf of SHIP. After trial, a judge found that Sostilio properly performed the installation and that the homeowner improperly maintained the boiler, which, as a result, caused property damage. The judge, finding no causation, entered judgment for Sostilio on SHIP's third-party claim for breach of the duty to defend and indemnify. We reverse in part and return this case for an assessment of damages.

SHIP is in the business of selling home improvement products to consumers and, in some cases, arranging for the installation of the products through independent contractors. SHIP and Sostilio entered into a contract, titled "New Contractor Packet/Independent Contractor Agreement." SHIP sold a water boiler to Mohammad Z. Ghory ("Ghory") and arranged for Sostilio to perform the required installation services. Shortly after the completion of the installation, Ghory filed a small claims action against SHIP, alleging that the boiler was improperly installed and that the improper installation caused water damage to the residence.

SHIP, through its third-party administrator, informed Sostilio of the claim and demanded that he defend and indemnify SHIP. Sostilio was advised that if a response to the demand was not made within thirty days of the demand notice, the silence would be deemed a denial of the demand request and SHIP would take action it deemed appropriate to protect its interests, including resolving the claim and, thereafter, pursuing Sostilio. Sostilio did not take steps to comply with the demand. SHIP

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filed a motion to transfer the case from the small claims session to the regular civil docket. The motion was allowed, and SHIP filed a third-party claim against Sostilio.

Following a jury-waived trial, the judge found that, prior to trial, SHIP had settled the claim brought against it by Ghory because "the cost to defend the action was greater than the amount Ghory was seeking." The judge rejected SHIP's assertion that the settlement was influenced by Sostilio's refusal to defend, concluding that SHIP "did not defend against Ghory's complaint because it was not in its economic interest to do so."

The defense and indemnity provisions of the agreement both SHIP and Sostilio entered into are, in relevant part, as follows.

"(a) Defense To the fullest extent permitted by law, Contractor shall, at its own expense, defend Sears . . . against any allegation (regardless of whether it is false, fraudulent or groundless, whether Contractor's obligations are applicable pursuant to the terms of [the indemnification provision], or whether it alleges any negligence, willful misconduct or culpability by Sears) in any claim, complaint, demand, investigation, suit, proceeding or cause of action that arises, directly or indirectly, from the performance of the Work or the Service Work Orders . . . to the extent caused by Contractor of a breach or default under any covenant or provision of this Agreement . . . or arising out of any actual or alleged defect or improper service by Contractor . . . . Sears may, at its election, take control of defense and investigation of Claims against Sears, and may employ and engage attorneys of its own choice to manage, at Contractor's cost, risk and expense . . . ."

"(b) Indemnification To the fullest extent permitted by law, Contractor shall, at its own expense, . . . indemnify and hold harmless any Sears indemnitee from any and all loss, damage, cost, expense, fines, penalty, judgment, and any other liability, including but not limited to reasonable attorneys' fees and expenses and costs of investigation incurred by any Sears Indemnitee arising out of any Claim."

We first address the issue of indemnification. SHIP argues that the breach of the duty to defend gives rise to the right to indemnification. We reject that argument. Massachusetts makes void any indemnity provision "which requires a subcontractor to indemnify any party for injury to persons or damage to property not caused by the subcontractor." G.L. c. 149, § 29C. The plain language of the indemnification language does not include an express requirement of causation. We deem the provision void. [Note 4]

"Construing the language of a[ ] . . . contract is a question of law for the reviewing court." Affiliated FM Ins. Co. v. Constitution Reinsurance Corp., 416 Mass. 839, 842 (1994). When interpreting a contract, the court must give full effect to all terms, to be "taken in their plain and ordinary sense." Rogaris v. Albert, 431 Mass. 833, 835 (2000). "When the written agreement, as applied to the subject matter, is in any respect

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uncertain or equivocal in meaning, all the circumstances of the parties leading to its execution may be shown for the purpose of elucidating, but not of contradicting or changing its terms." Affiliated FM Ins. Co., supra, quoting Robert Indus., Inc. v. Spence, 362 Mass. 751, 753-754 (1973). Language must be construed to "give . . . reasonable meaning whenever possible" to the parties' intentions. Shea v. Bay State Gas Co., 383 Mass. 218, 225 (1981). All words should be given effect if possible; none should be considered superfluous "if any other construction is rationally possible." Computer Sys. of Am., Inc. v. W. Reserve Life Assur. Co. of Ohio, 19 Mass. App. Ct. 430, 437 (1985). The principal guide to contract interpretation is, of course, the language of the contract itself. Words that are plain and free from ambiguity must be construed "in their usual and ordinary sense." Citation Ins. Co. v. Gomez, 426 Mass. 379, 381 (1998).

With these principles in mind, we now turn to Sostilio's argument that the plain language of the duty to defend provision arises only upon proof that Sostilio caused the damage alleged by Ghory and, as found by the trial judge, Sostilio did not cause the loss. In this context, Sostilio focuses upon the language of the provision that states, "Contractor shall, at its own expense, defend Sears . . . against any allegation . . . in any claim, complaint, demand, investigation, suit, proceeding or cause of action that arises, directly or indirectly, from the performance of the Work or the Service Work Orders . . . to the extent caused by Contractor . . . " (emphasis added). [Note 5]

We agree that read in isolation, there exists a causation requirement. But the provision is to be read as a whole. And when read as a whole, the argument fails. Sostilio's reading ignores the connected clause. When read as a whole, the provision is disjunctive: "to the extent caused by Contractor of a breach or default under any covenant or provision of this Agreement . . . or arising out of any actual or alleged defect or improper service by Contractor . . ." (emphasis added). Ghory's claim clearly states an allegation "arising out of any actual or alleged defect or improper service by [Sostilio]." [Note 6]

The judgment is affirmed in part and reversed in part, and the case is returned to the trial court for an assessment of damages.