Opinion
No. 12–P–1293.
2013-09-24
CBI CONSULTING, INC. v. TRUSTEES OF BOSTON COLLEGE & another.
By the Court (COHEN, GRAINGER & CARHART, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiff, CBI Consulting, Inc. (CBI), appeals from the dismissal of its complaint alleging claims for breach of contract and contractual indemnity against the defendants, Trustees of Boston College (Boston College) and Acme Waterproofing Co., Inc. (Acme). A judge of the Superior Court, being of the opinion that CBI was required to assert its claims in a previously filed personal injury action (the Bowen case) in which CBI, Boston College, and Acme were codefendants, dismissed CBI's complaint pursuant to the doctrine of issue preclusion and Mass.R.Ci as amended, 450 Mass. 1403 (2008). We reverse and remand for further proceedings.
Background.
CBI, an architectural design firm, entered into a contract with Boston College to prepare drawings, specifications, and contract documents related to the repair of one of Boston College's garage facilities. The contract provided that Boston College would defend, indemnify, and hold harmless CBI “from and against all claims, damages, losses and expenses for claims, damages and losses arising out of or resulting from claims against CBI arising out of or resulting from the work of others.” Boston College selected Acme to perform the construction work associated with the repairs. The contract between Boston College and Acme provided that Acme would indemnify and hold harmless Boston College and CBI “from and against claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of performance of the Work.”
We take the facts from CBI's complaint (including attachments), and from pleadings and other documents relating to the Bowen case that were put before the motion judge. The document contained in Boston College's supplemental appendix (provisionally accepted for filing subject to review of its propriety by this panel) was not provided to the motion judge and is not properly part of the record on appeal. Boston College's motion to file the supplemental appendix is therefore denied.
Acme completed the repairs in 2005. In 2006, a CBI employee visited the project site and noticed defects in Acme's repairs to the garage. CBI sent Acme a letter requesting that Acme repair the defective work pursuant to the construction contract's two-year warranty, and sent a copy of the letter to Boston College.
CBI essentially claims that it is a third-party beneficiary of the contract between Boston College and Acme.
On January 19, 2008, Kevin Bowen allegedly slipped and fell on an ice-covered patch in an area of the garage previously identified to Acme as needing further repair. Bowen and members of his family filed a civil action for damages against Boston College and later added Acme and CBI as defendants. On May 21, 2008, CBI answered the Bowen complaint and filed cross claims against Boston College and Acme for contribution and common law indemnity. While the Bowen case was pending, CBI sent Boston College and Acme three letters, dated April 16, 2010, June 14, 2011, and July 8, 2011,
demanding that they provide CBI with a defense and indemnity, pursuant to the indemnification provisions in CBI's contract with Boston College and Boston College's contract with Acme.
The three letters are attached as exhibits to CBI's complaint in this action.
On July 6, 2011, CBI filed a motion in the Bowen case seeking leave to amend its cross claims by adding an additional count for contractual indemnity. Later that month, a judge of the Superior Court denied CBI's motion as untimely, observing that “the trial remains scheduled for 9/12/11, subject to the [Regional Administrative Judge] finding an available trial judge, as this judge retires on Sept[ember] 15th, 2011.” CBI filed the present action on August 8, 2011, alleging breach of contract and contractual indemnification. In response, Boston College and Acme both filed motions to dismiss pursuant to rule 12(b)(9), claiming that CBI was required to litigate its contractual indemnity claims in the Bowen case and could not assert them in a new action.
On September 6, 2011, after Boston College and Acme filed their motions to dismiss, CBI filed an amended complaint adding a count pursuant to G.L. c. 93A. See Mass.R.Civ.P. 15(a), 365 Mass. 761 (1974). Because this appeal has been briefed and argued on the apparent assumption that the case was dismissed on the original complaint, and because the amended complaint has not been included in the appendix, we do not consider the c. 93A claim to be before us.
By mid-September, 2011, the claims of Bowen and his family were resolved by settlement; Boston College and Acme settled on July 6, 2011, and CBI settled on September, 13, 2011, shortly before trial was set to begin. On November 3, 2011, Acme, Boston College, and CBI filed a joint stipulation of dismissal without prejudice as to all cross claims asserted in the Bowen case.
On February 23, 2012, the motions to dismiss filed by Boston College and Acme were argued before another judge of the Superior Court. The judge allowed the motions in a marginal order “pursuant to 12(b)(9) as requested by the parties and issue preclusion on motion of the court,” opining that CBI's current claims were “identical” to its cross claims for common law indemnity in the Bowen case and should have been timely brought in that case.
Discussion. We review the decision granting the defendant's motion to dismiss de novo. Okali v. iOkali, No. 2, 81 Mass.App.Ct. 381, 385 (2012).
1. Issue preclusion.
Issue preclusion (also known as collateral estoppel) is a component of the doctrine of res judicata. See Kobrin v. Board of Registration in Med., 444 Mass. 837, 843 (2005). It bars a party from relitigating an issue raised in a prior action if (1) the prior adjudication resulted in a final judgment on the merits, (2) the party against whom preclusion is sought was a party to the prior action (or in privity with a party), (3) the issue in the prior action is identical to the issue in the current action, and (4) the issue was essential to the earlier judgment. Okali v. Okali, supra.
Because we conclude that issue preclusion is not a valid basis for dismissal, we need not consider the parties' competing views as to whether the judge properly could rely upon the doctrine sua sponte.
We need go no farther than the first factor to conclude that issue preclusion does not apply here.
Following the settlement of the Bowen suit, CBI, Acme, and Boston College stipulated to the dismissal of all cross claims without prejudice. A voluntary stipulation of dismissal without prejudice is not a final judgment on the merits. Morgan v. Evans, 39 Mass.App.Ct. 465, 470 (1995). Furthermore, even where a case ends by stipulation with prejudice, interlocutory orders entered before the stipulation of dismissal will not be given collateral estoppel effect. See Jarosz v. Palmer, 436 Mass. 526, 535–536 (2002). Accordingly, the denial of CBI's motion to amend its cross claims in the Bowen case and the subsequent resolution of those claims by stipulation of dismissal do not provide a basis for issue preclusion.
We therefore need not address CBI's arguments regarding the third and fourth factors which, it contends, also were not met.
In arguing in support of the judge's reliance upon issue preclusion, Acme analogizes CBI's present claims to compulsory counterclaims. The analogy is flawed. While Mass.R.Civ.P. 13(a), as amended, 423 Mass. 1405 (1996), states that a party “shall” assert any counterclaims arising out of the same transaction and occurrence, thereby making such counterclaims compulsory, Mass.R.Civ .P. 13(g), 365 Mass. 758 (1974), states only that a party “may” assert cross claims arising out of the same transaction and occurrence of the original action. Compare Mass.R.Civ.P. 13(a), with Mass.R.Civ.P. 13(g). Furthermore, the 1973 Reporter's Notes to Rule 13 state: “[Rule 13(g) ] does not purport to prescribe machinery for resolving in one litigation all the disputes between all the parties. To begin with, it is entirely permissive. Failure to assert a cross claim will never forfeit the right to commence an independent action.” 1973 Reporter's Notes to Mass.R.Civ.P. 13(g), Mass. Gen. Laws Ann., Rules of Civil Procedure, at 191 (West 2006).
2. Rule 12(b)(9). “Rule 12(b)(9) provides for the dismissal of a second action in which the parties and the issues are the same as those in a prior action still pending in a court of this Commonwealth.” M.J. Flaherty Co. v. United States Fid. & Guar. Co., 61 Mass.App.Ct. 337, 339 (2004). Here, it is undisputed that the parties are identical and that the cross claims in the Bowen case remained pending when CBI filed the present action on August 8, 2011.
See generally, Lyons v. Duncan, 81 Mass.App.Ct. 766, 771 (2012). The question remains whether the issues in the two cases are “the same.” We conclude that they are not.
It was not until November 3, 2011, that the parties filed their stipulation of dismissal without prejudice as to all cross claims.
Common law indemnity is the tort-based right of a person without fault and “compelled to defend himself against the wrongful act of another” to recover his loss, including attorney's fees, from the wrongdoer. Elias v. Unisys Corp., 410 Mass. 479, 482 (1991). It “is permitted only when one does not join in the negligent act but is exposed to derivative or vicarious liability for the wrongful act of another.” Stewart v. Roy Bros., Inc., 358 Mass. 446, 459 (1970). In keeping with these principles, CBI's cross claims alleged that it did not cause Bowen's injuries and that any liability of CBI would be “derivative” and imposed by reason of the conduct of Boston College or Acme. Thus, the issues arose from the events leading to Bowen's injuries and concerned the parties' roles in causing those injuries.
In contrast, the issues in CBI's present action arise from the contracts entered into by the parties in connection with the garage project, and concern the interpretation and applicability of the indemnity provisions contained therein.
Whether viewed “transactionally” (as Boston College contends) or on the basis of legal theory (as CBI contends) the claims are not “the same,” and rule 12(b)(9) does not apply. Cf. M.J. Flaherty Co. v. United States Fid. & Guar. Co., 61 Mass.App.Ct. at 339–340 & n. 3.
The present dispute will require the court to determine, at least in the first instance, the meaning and scope of the phrase “arising out of” as used in the indemnity provisions, and whether that phrase gives rise to indemnity obligations on the part of Boston College and Acme whether or not Bowen's claims against CBI were based upon its independent negligence. Cf. American Home Assurance Co. v. First Specialty Ins. Corp., 73 Mass.App.Ct. 1, 5–6 (2008) (discussing the expansive interpretation given to “arising out of” when that phrase is used in insurance policies). See also Bagley v. Monticello Ins. Co., 430 Mass. 454, 457 (1999) (same).
Some cases discussing rule 12(b)(9) also take into account whether “all the operative facts relied on to support the present action had transpired prior to the commencement of the first action.” Keen v. Western New England College, 23 Mass.App.Ct. 84, 85 (1986). See Zora Enterprises, Inc. v. Burnett, 61 Mass.App.Ct. 341, 346 (2004). Assuming without deciding that Boston College has correctly identified the commencement date of the first action as October 5, 2010, when CBI answered the third amended complaint in the Bowen case and reasserted its cross claims, it is not apparent from the face of CBI's complaint (or, for that matter, from any other record evidence) that the defendants' alleged breaches of their contractual responsibilities already had occurred by that date. See ibid.
Nor is there merit to the defendants' assertions that it is inequitable for them to be exposed to claims that were deemed untimely when CBI's motion to amend its cross claims in the Bowen case was denied. The denial of the motion to amend was based on the temporal proximity to trial; it did not address the merits of CBI's claims.
Furthermore, by stipulating to the dismissal of the cross claims in the Bowen case “without prejudice,” the defendants agreed to a resolution that left open the possibility of future litigation. Finally, any prejudice to the defendants is outweighed by the prejudice to CBI of losing the opportunity to litigate its claim. See Zora Enterprises, Inc. v. Burnett, 61 Mass.App.Ct. at 347 n. 11, citing Striar v. Cooper, 6 Mass.App.Ct. 841, 841–842 (1978).
It is not disputed that CBI's present claims were asserted within the applicable limitations period.
Conclusion. The judgment dismissing CBI's complaint is reversed and the case remanded to the Superior Court for further proceedings.
So ordered.