
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        Nos. 95-2051             95-2207                    CHARLES MACGLASHING AND SHARLENE MACGLASHING,                                Plaintiffs, Appellees,                                          v.                           DUNLOP EQUIPMENT COMPANY, INC.,                                 Defendant, Appellee.                                 ____________________                       RESTORATION PRESERVATION MASONRY, INC.,                          Third-Party Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Reginald C. Lindsay, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                                  Cyr, Circuit Judge,                                       _____________                      Coffin and Bownes, Senior Circuit Judges.                                         _____________________                                 ____________________            Robert P. Powers, with whom Michael  R. Byrne, Andre A.  Sansoucy,            ________________            _________________  __________________        and  Melick  & Porter  were  on  brief  for  Restoration  Preservation             ________________        Masonry, Inc., appellant.            Thomas G.  Hoffman, with whom Thomas  M. Greene,  Paul D. Hoffman,            __________________            _________________   _______________        Greene  &  Hoffman, P.C.  were on  brief  for Charles  MacGlashing and        ________________________        Sharlene  MacGlashing,  plaintiffs,  appellees  and  Dunlop  Equipment        Company, Inc., defendant, appellee.                                 ____________________                                    July 25, 1996                                 ____________________                      BOWNES, Senior Circuit Judge.  This appeal concerns                      BOWNES, Senior Circuit Judge.                                _____________________            the  interpretation and enforceability  of an indemnification            clause  in a  lease  between third-party  defendant-appellant            Restoration Preservation Masonry, Inc. ("RPM") and defendant-            appellee   Dunlop   Equipment   Company,   Inc.   ("Dunlop").            Plaintiff-appellee  Charles MacGlashing  was injured  when an            elevated  work platform  leased  by Dunlop  to RPM  collapsed            while  he and another employee of RPM  were using it in their            masonry  work.   MacGlashing and  his wife, residents  of New            Hampshire, brought a diversity action in tort against Dunlop,            a   Massachusetts  corporation,  in  the  district  court  of            Massachusetts.     Dunlop  sued   RPM,  invoking  the   lease            indemnification  clause.   Prior to  trial the  MacGlashings,            with court approval, entered into a settlement agreement with            Dunlop.  The issue  on  appeal is  whether the  MacGlashings,            standing  in the shoes of  Dunlop, can collect  the amount of            the settlement  from RPM under the  indemnification clause of            the lease between RPM and Dunlop.  This issue was decided  in            favor  of the  MacGlashings and  Dunlop by  summary judgment.            There is no question that Massachusetts law applies.                        RPM maintains  that it has no  obligation under the            lease agreement to indemnify  Dunlop for damages flowing from            Charles  MacGlashing's  accident  because  Dunlop  materially            breached  the agreement.  It also challenges the scope of the                                         -2-                                          2            indemnification clause.  Discerning  no error in the district            court's summary judgment analysis, we affirm.                                          I.                                          I.                                      BACKGROUND                                      BACKGROUND                                      __________                      Viewed  in the  light  most favorable  to RPM,  the            nonmoving   party,  the  facts  are  as   follows.    RPM,  a            Massachusetts-based corporation, employed Charles MacGlashing            as  a  brick  mason until  September  2,  1993,  when he  was            involved in  a work-related  accident at The  Longwood Towers            located in  Brookline, Massachusetts.  In  1993, the Longwood            Corporation  ("Longwood"),  owner  of  The   Longwood  Towers            complex, commissioned RPM to conduct phase II of a renovation            project at Longwood  Towers.   Like phase I,  which had  been            completed  a year  earlier  by NER,  Inc.  ("NER"), phase  II            involved removal  and replacement of  brick and stone  at the            top of  three eight-story  buildings located in  the complex.            RPM was formed by former employees of  NER.  Several of them,            including RPM's  president Paul Haven, had worked on phase I.            During  both phase I and II,  mobile, elevated work platforms            fitted with eight-foot outrigger  devices, which extended off            the  main platform  to expand  its width,  were utilized  for            stone and brick removal and to make certain setback  portions            of  the   buildings   accessible.     The   outriggers   were            modifications to the original platform design.                                          -3-                                          3                      On September 2, 1993, MacGlashing  and a co-worker,            James  Proctor,  were removing  a  piece  of  stone from  the            parapets of Building B when the work platform they were using            collapsed.   Both  men  fell  eight  stories to  the  ground.            Proctor died  from the  injuries he sustained.   MacGlashing,            who  was  thirty-nine at  the  time,  survived, but  suffered            injuries that hospitalized  him for six  months and left  him            partially  paralyzed and  in constant  pain.   These injuries            included, inter alia, broken bones, internal and neurological                      _____ ____            damage,  a ruptured  aorta and  bladder, a  perforated colon,            lung damage, and lacerations.  MacGlashing incurred more than            $800,000.00 in medical fees  and expenses as a result  of the            accident.   His  future medical costs  and net  economic loss            have been  projected between $600,000.00 to  $1.1 million and            $1.1 million  to $1.3 million,  respectively.  At  trial, the            parties  agreed that  the platform  involved in  the accident            collapsed  because it could not bear the weight placed on it,            but disagreed about whether the platform had been defectively            designed,   used  negligently,  or  negligently  modified  by            Dunlop.   Dunlop, whose  business consists of  supplying work            platforms for sale or  lease, provided the platforms employed            in  both phase  I and  II of  the Longwood  Towers renovation            project.   It  executed a  July 7,  1993, lease  agreement to            provide four platforms with  RPM's president, Paul Haven, who            had left NER to form RPM.                                           -4-                                          4                      The lease agreement executed between RPM and Dunlop            was  a standard  form  contract and  contained the  following            indemnification clause:                        12.    THE LESSEE  HEREBY  ABSOLVES THE                      LESSOR    OF   ANY    RESPONSIBILITY   OR                      OBLIGATION  IN  THE  EVENT  OF  ACCIDENT,                      REGARDLESS OF CAUSES OR CONSEQUENCES, AND                      THAT   ANY   COSTS,   CLAIMS,  COURT   OR                      ATTORNEY'S  FEES, OR  LIABILITY RESULTING                      FROM  THE USE OF DESCRIBED EQUIPMENT WILL                      BE INDEMNIFIED BY  THE LESSEE  REGARDLESS                      AGAINST  WHOM  THE CLAIMANT  OR CLAIMANTS                      INSTITUTE ACTION.                                         II.                                         II.                                  PROCEEDINGS BELOW                                  PROCEEDINGS BELOW                                  _________________                      The  MacGlashings  brought   a  federal   diversity            jurisdiction suit,  see 28 U.S.C.    1332(a), against Dunlop,                                ___            seeking   recovery  on   theories   of  negligence,   product            liability, and breach of warranty.   They charged Dunlop with            negligence  in  the  design  and  modification  of  the  work            platforms leased to RPM, negligence in failing to inspect the            platforms and  repair defects  and damage, and  negligence in            failing to  warn and instruct RPM employees in the use of the            platform.    They  also  asserted that  Dunlop  breached  the            implied warranty  that the work  platforms were  merchantable            and fit  for  their intended  use.   The  MacGlashings  later            amended  their complaint  to assert  claims  against Longwood            under  Mass. Gen.  L. ch. 143,    51.   These  claims are not            relevant to this appeal.                                           -5-                                          5                      Dunlop filed a  third-party complaint against  RPM,            seeking  indemnification pursuant  to their  lease agreement.            RPM   denied   any    indemnification   responsibility    and            counterclaimed,  alleging that Dunlop materially breached the            lease  agreement  by  providing  defective  and  unreasonably            dangerous equipment.                        Each of the parties  filed summary judgment motions            before  the magistrate  judge.   Dunlop and  the MacGlashings            moved for summary judgment on Dunlop's third-party complaint.            They   maintained  that,  under  the  indemnification  clause            contained  in  the  lease  agreement, RPM  was  obligated  to            indemnify Dunlop for any liability  resulting from the use of            the  leased  equipment and  that  Dunlop  did not  materially            breach its  obligations under that agreement.   RPM contested            this joint  motion  and  filed  its own  motion  for  summary            judgment on Dunlop's third-party  claims.  In both instances,            it  contested  the  enforceability  of  the  lease  agreement            executed  with   Dunlop,  claiming  that   Dunlop  materially            breached   the  implied  warranties  of  merchantability  and            fitness for  a particular purpose contained  in the agreement            by  failing to  test the  load-bearing capacity  of the  work            platforms  and outriggers  prior to delivery  of them  to the            project site.                      The case  was assigned to  a magistrate judge.   In            her report  and recommendations,  she  first addressed  RPM's                                         -6-                                          6            summary judgment  motion.  The magistrate  judge denied RPM's            claim  that  the  lease  agreement it  executed  with  Dunlop            included  an implied  warranty  of fitness  for a  particular            purpose, under Mass.  Gen. L.  ch. 106,    2-315, but  agreed            that  it contained  an implied  warranty  of merchantability,            under Mass. Gen. L.  ch. 106,   2-314.  The  magistrate judge            recommended that RPM's motion  for summary judgment be denied            because  she  found  that  genuine issues  of  material  fact            existed as to whether Dunlop breached its implied warranties.                      Turning to the  joint motions for  summary judgment            filed by  Dunlop and  the MacGlashings, the  magistrate judge            concluded that the record, viewed in RPM's favor, precluded a            dismissal with  prejudice, of RPM's counterclaim  for breach.            She recommended, however,  that Dunlop and the  MacGlashings'            joint motion  for  summary judgment  on Dunlop's  third-party            complaint  be  allowed.   The  magistrate  judge found  that,            barring a determination  that Dunlop materially  breached the            lease agreement,  RPM was "obligated to  indemnify Dunlop for            any liability resulting from Charles MacGlashing's use of the            leased  equipment."   She  concluded  that "whether  Dunlop's            conduct  amounted  to a  material  or serious  breach  of the            contract"  was an issue  of fact for  the jury.   Each of the            parties  filed timely  objections  to the  magistrate judge's            report.                                           -7-                                          7                      The district court  issued an  order accepting,  in            part, and  modifying, in part, the  Report and Recommendation            of  the magistrate judge.  The district court agreed with the            magistrate   judge's  determination  that  RPM's  motion  for            summary judgment should be denied.  While it also agreed that            summary judgment in favor of Dunlop and the  MacGlashings was            appropriate  on Dunlop's  third-party  complaint,  the  court            rejected   the  magistrate  judge's   conclusion  that  RPM's            obligation  to  indemnify  Dunlop  for  damages arising  from            Charles  MacGlashing's  injuries  could  be  relieved  by   a            material  breach  by Dunlop.    The  court  held that,  under            Massachusetts law,  a party's  breach of an  implied warranty            was   insufficient   to    invalidate   a   broadly    worded            indemnification clause.                        The district  court scheduled  a jury trial  on the            various claims  asserted by  the parties.   Before the  trial            date  arrived,  however,  the  MacGlashing's  entered  into a            settlement  agreement with Dunlop, subject to court approval.            The settlement contemplated satisfying the MacGlashings' suit            for damages against Dunlop with a $750,000.00 cash payment --            approximately 75 percent of  the insurance coverage available            to  Dunlop through  its  insurer  --  and the  assignment  of            Dunlop's claims against RPM and Longwood to the MacGlashings.            Under the  agreement,  judgment  was  to enter  in  favor  of            Charles  MacGlashing in  the amount  of $4,560,000.00  and in                                         -8-                                          8            favor  of  Sharlene   MacGlashing  for   $300,000.00.     The            MacGlashings agreed  to seek no further  recovery from Dunlop            in the event they could not recover from RPM or Longwood.                       The  district  court held  a  hearing and  reviewed            evidence  before approving  the settlement.   At  the hearing            RPM's counsel stated, inter alia:                                  __________                         I  don't  believe  that  RPM  has  any                      objection   to   the  structure   of  the                      settlement     under      the     current                      circumstances .  . .  I believe that  the                      settlement  is  fair and  equitable under                      these circumstances.                      The district  court approved  the settlement.   The            claims against Longwood were tried to a jury which returned a            verdict  in favor of Longwood.   The district  court issued a            final  judgment dismissing  the  action of  the  MacGlashings            against  Longwood,  entering  judgment  against  Dunlop,  and            ordering  that Charles MacGlashing  recover $4,651,739.23 and            his wife,  $306,032.52 -- the  amount of the  settlement plus            post-judgment interest  at the  rate  of 5.86%  -- from  RPM.            This appeal followed.                                                 III.                                         III.                                  STANDARD OF REVIEW                                  STANDARD OF REVIEW                                  __________________                      We review  the district  court's  grant of  summary            judgment  de novo  and review  the record  in the  light most                      __ ____            favorable to  the nonmoving party, drawing  all inferences in            that  party's favor.  Den Norske Bank  AS v. First Nat'l Bank                                  _______________________________________            of Boston, 75 F.3d 49, 53  (1st Cir. 1996); EEOC v. Green, 76            _________                                   _____________                                         -9-                                          9            F.3d  19, 23 (1st Cir. 1996).   "Our review is limited to the            record as it stood before  the district court at the  time of            its  ruling."  J. Geils Band Employment Benefit Plan v. Smith                           ______________________________________________            Barney Shearson, Inc.,  76 F.3d 1245,  1250 (1st Cir.  1996).            _____________________            Summary judgment  is proper  "if the pleadings,  depositions,            answers to interrogatories, and  admissions on file, together            with  the affidavits, if any,  show that there  is no genuine            issue as to any  material fact and that  the moving party  is            entitled to  judgment as a matter  of law."  Fed.  R. Civ. P.            56(c).                      Allegations of a  factual dispute "will  not defeat            an otherwise  properly supported motion for summary judgment;            the requirement is that there be no genuine issue of material            fact."  Morrissey v. Boston Five Cents Sav. Bank, 54 F.3d 27,                    ________________________________________            30 (1st  Cir. 1995)(quoting Anderson v.  Liberty Lobby, Inc.,                                        ________________________________            477  U.S. 242, 247-48 (1986)).  Material facts are those that            have the potential to affect the outcome of a suit.  J. Geils                                                                 ________            Band, 76 F.3d at  1250-51.  Disputes  as to the existence  of            ____            material facts are genuine  if "'the evidence is such  that a            reasonable  jury could  return  a verdict  for the  nonmoving            party.'"   Morrissey, 54  F.3d at  30 (quoting  Anderson, 477                       _________                            ________            U.S. at 247-48).   We must affirm the district  court's grant            of summary judgment "[i]f the  evidence [presented by RPM] is            merely colorable,  or is  not significantly probative."   Id.                                                                      ___            We apply Massachusetts law.                                            -10-                                          10                                         IV.                                         IV.                                      DISCUSSION                                      DISCUSSION                                      __________                      The  issue is  whether  the indemnification  clause            contained in the lease agreement RPM executed with Dunlop  is            enforceable and, if so,  whether its scope includes liability            for damages stemming from  the injuries MacGlashing sustained            as a  result of  the  accident.   RPM avers  that  it is  not            obligated,  under  Massachusetts  law,  to pay  the  judgment            awarded the  MacGlashings because Dunlop  materially breached            the  lease  agreement,  relieving   RPM  of  the  promise  to            indemnify  Dunlop  contained  in   the  agreement.    In  the            alternative,  RPM  argues  that even  if  the indemnification            clause  is valid, it should not be deemed responsible for the            particular claims  advanced by the MacGlashings  because they            fall outside the contemplated scope of the agreement.                         Appellees contest  both  of these  arguments.    We            begin by addressing the enforceability of the lease agreement            and  then turn to a discussion of its scope.                       Enforceability of the Lease Agreement's                       Enforceability of the Lease Agreement's                       _______________________________________                                Indemnification Clause                                Indemnification Clause                                ______________________                      RPM   challenges   the   enforceability    of   the            indemnification clause by attacking the validity of the lease            agreement it executed with Dunlop.  See Kelly v. Dimeo, Inc.,                                                ___ ____________________            31 Mass. App. Ct. 626, 628 (1991)("Under Massachusetts law, a            contract-based right to indemnification  exists only if there            is a  binding contract  between indemnitor and  indemnitee in                                         -11-                                          11            which such right is expressed or from which it  can be fairly            implied."), review denied, 412 Mass. 1102 (1992).  RPM, using                        ______ ______            the Uniform Commercial Code as its launching pad, argues that            the  indemnification clause  is unenforceable  because Dunlop            materially  breached  implied warranties  of merchantability,            see Mass. Gen. L. ch. 106,    2-314 (1990), and fitness for a            ___            particular purpose,  see  Mass.  Gen. L.  ch.  106,     2-315                                 ___            (1990),  by  providing  RPM  with work  platforms  that  were            defective  and  unreasonably  dangerous.    RPM asserts  that            because, under Massachusetts law, the MacGlashings would  not            have  been entitled  to  any recovery  in  the absence  of  a            finding that the work  platform Dunlop provided was defective            or unreasonably  dangerous, Dunlop, ipso facto,  breached the                                                __________            implied  warranties  of  merchantability and  fitness  for  a            particular purpose.                        RPM,  in effect, attempts to  use the tort claim of            the MacGlashings against Dunlop as  a basis for its  argument            that Dunlop breached its implied warranty of merchantability.            But the contract between  RPM and Dunlop was for the lease of            property.  RPM  cannot use  the indemnity clause  to turn  an            economic contract into one based on tort concepts.                      Massachusetts   law    plainly   forecloses   RPM's            argument.   It adopts the  majority view which  draws a clear            distinction  between tort  recovery  for physical  injury and            contract recovery for  economic loss.   See Jacobs v.  Yamaha                                                    ___ _________________                                         -12-                                          12            Motor Corp., 420 Mass. 323, 329 n.5 (1995); Bay State-Spray &            ___________                                 _________________            Provincetown S.S., Inc. v. Caterpillar Tractor Co., 404 Mass.            __________________________________________________            103, 107  (1989); Colter v.  Barber-Greene Co., 403  Mass. 50                              ____________________________            (1988);  Correia v.  Firestone Tire &  Rubber Co.,  388 Mass.                     ________________________________________            342,  356 (1983); Marcil v.  John Deere Indus.  Equip. Co., 9                              ________________________________________            Mass. App. Ct. 625,  630 (1980); see also Canal Elec.  Co. v.                                             ___ ____ ___________________            Westinghouse Elec. Co.,  973 F.2d 988,  996 (1st Cir.  1992);            ______________________            Reibold v. Simon  Aerials, 859  F. Supp. 193,  198 (E.D.  Va.            _________________________            1994).   The rule  that the absence of  a showing of personal            injury, or of  physical damage to  property belonging to  the            contracting party  forecloses  recovery for  economic  losses            stemming from  tort-based strict  liability or negligence  is            well established  in Massachusetts.  Garweth  Corp. v. Boston                                                 ________________________            Edison  Co.,  415  Mass.  303,   305  (1993).    Attempts  to            ___________            circumvent this rule by  "[c]ouching the allegations in terms            of breach of  contract" have been  rejected routinely.   See,                                                                     ___            e.g.,  FMR Corp.  v. Boston  Edison Co.,  415 Mass.  393, 394            ____   ________________________________            (1993).   We  cannot,  as RPM  urges,  regard the  difference            between  tort and  contract-based claims  as  "irrelevant" in            this  case.    RPM's  attempt  to  shift  the  obligation  to            compensate the MacGlashings back  to Dunlop fails because RPM            alleges no direct damage  or injury to itself.   The argument            that  RPM  is  entitled  to   relief  from  the  contract  it            negotiated with Dunlop hinges entirely on the physical injury            its   employee,  Charles  MacGlashing,  sustained.    Compare                                                                  _______                                         -13-                                          13            Garweth,  415 Mass. at 307.  RPM  has not made the showing of            _______            injury or damage to itself as Massachusetts law requires.                      Moreover, appellant  has not convinced  us that the            alleged  breach   of  the   lease   agreement  rendered   the            indemnification  clause  invalid, as  if  it  had never  been            executed.   The  one-page contract  executed between  RPM and            Dunlop  contains standard-form  language  and  clauses  which            suggest  that the  indemnity provision  is separate  from the            underlying  lease.  The face of the agreement sets out, inter                                                                    _____            alia, the  type and cost  of the equipment  to be leased,  as            ____            well  as guidelines  for its installation  and transportation            around the site, and expressly  incorporates a July 21, 1993,            handwritten note regarding delivery,  assembly, and pickup of            the work platforms by Paul Haven, RPM's president.                         The   reverse  side   of  the   agreement  contains            seventeen numbered paragraphs  that outline lease  conditions            and  are clearly separated by spacing.  Two of these reverse-            side  clauses concern responsibility for damages flowing from            the use of equipment referred to in the lease agreement.  The            first clause  provides that  RPM assumes  full responsibility            under  the agreement  for  damages,  injuries, and  accidents            caused by the use of Dunlop equipment and reads:                       3.   Lessee     assumes      the     full                      responsibility for  damages, injuries and                      accidents  resulting  to any  property or                      persons,  caused  by  the  use   of  said                      equipment  while in the possession of the                      lessee, from the  time of arrival at  the                                         -14-                                          14                      above  named location, during the term of                      lease, and until equipment is returned to                      lessor.            The second  clause deals with  indemnification and is  one of            six written in boldfaced type. It provides that RPM  absolves            Dunlop of  any responsibility or  obligation in the  event of            accidents  resulting from  the use  of the  leased equipment,            regardless of cause or consequence and reads:                      12.  THE   LESSEE  HEREBY   ABSOLVES  THE                      LESSOR    OF   ANY    RESPONSIBILITY   OR                      OBLIGATION  IN  THE  EVENT  OF  ACCIDENT,                      REGARDLESS OF CAUSES OR CONSEQUENCES, AND                      THAT   ANY   COSTS,   CLAIMS,  COURT   OR                      ATTORNEY'S  FEES, OR  LIABILITY RESULTING                      FROM THE USE OF DESCRIBED  EQUIPMENT WILL                      BE INDEMNIFIED BY  THE LESSEE  REGARDLESS                      AGAINST  WHOM  THE CLAIMANT  OR CLAIMANTS                      INSTITUTE ACTION.            The standard form equipment sign-off sheets Paul Haven signed            on the 20th, 22nd, 23rd,  and 27th of July 1993, when  Dunlop            delivered  the  work  platforms  to the  work  site,  contain            similar  language.    They  provide  that  RPM  agrees  that:            "Dunlop,  Inc.  is not  responsible  for any  damages  to the            building, or any injuries or accidents resulting to people or            property caused from the use or misuse of this equipment."                      Based on our  reading of the lease and the sign-off            sheets, we do not think RPM and Dunlop intended the covenants            contained  in  the  lease agreement  and  the indemnification            clause to be  dependent.   See Connolly  v. Haines-CE  Brook,                                       ___ ______________________________            Inc.,  277 Mass.  423,  427  (1931)("[W]hether covenants  are            ____            conditional is determined . . . by the  true intention of the                                         -15-                                          15            parties as expressed by the language  of the contract."); see                                                                      ___            also 41  Am. Jur. 2d   17, at 358 (1995) ("Where the language            ____            of the indemnity contract is neither technical nor ambiguous,            the  words  are  given  their legal,  natural,  and  ordinary            meaning.").    Because the  right  of  action on  the  leased            platforms accrues as soon as there is  a breach of its terms,            -- i.e., failure to deliver the equipment in a timely fashion            -- the right of action under the indemnity agreement does not            accrue until Dunlop makes payment to a third party or suffers            the loss addressed by the agreement.  See 41 Am. Jur. 2d   4,                                                  ___            at  349 (1995);  42 C.J.S.    2,  at 72-73  (1991); see  also                                                                ___  ____            Restatement (Second) of Contracts   379, comment a.  We agree            with the  district court  that  the better  and more  logical            approach  is  to  treat  the  indemnification  clause  as  an            independent  provision of the lease.   See Chatlos Sys., Inc.                                                   ___ __________________            v.  Nat'l Cash Register Corp.,  635 F.2d 1081,  1085 (3d Cir.            _____________________________            1980).                        There is solid precedent  for our decision to treat            the indemnification clause as a separate agreement unaffected            by any breach of the lease contract.  See, e.g., Hill Constr.                                                  ___  ____  ____________            Corp. v.  American Airlines,  Inc., 996  F.2d 1315  (1st Cir.            __________________________________            1993)(carrier cargo liability  limitations survive breach  of            the agreement to carry cargo);  County of Middlesex v. Gewvyn                                            _____________________________            Constr. Corp., 450 F.2d 53 (1st Cir. 1971), cert. denied, 405            _____________                               _____ ______            U.S.   955  (1972)   (arbitration  agreement   valid  despite                                         -16-                                          16            construction contract breach).  The Supreme Judicial Court of            Massachusetts addressed  the question of whether  breach of a            contract undermines a consensual  allocation of risk in Canal                                                                    _____            Elec. Co. v. Westinghouse Elec. Corp., 406 Mass. 369  (1990).            _____________________________________            That case  involved electric  utility companies which  sought            remedies for breach, under the UCC, for losses they allegedly            incurred  as the result of  the failure of electric generator            components  supplied  by  Westinghouse Electric  Corporation.            They  sought to  be  relieved  of  the  limits  on  indirect,            special, incidental, and consequential damages imposed by the            selling policies  to which  they agreed.   Id.  at 371.   The                                                       ___            Supreme Judicial  Court held  that the liability  limitations            were enforceable  even though Westinghouse's efforts  to cure            the  problems  created  by   its  generator  components  were            unsuccessful. Id. at 374-75.                            ___                      This holding persuades us  that the course we adopt            in this case would be  followed by the Massachusetts  courts.            Under Massachusetts  law,  the  allocation  of  risk  through            contractual  agreements neither conflicts with public policy,            Canal Elec.,  406 Mass.  at 372; Minassian  v. Ogden  Suffolk            ___________                      ____________________________            Downs, Inc., 400 Mass. 490, 493 (1987), nor the Massachusetts            ___________            workers' compensation statute prohibition against an employee            receiving direct compensation for work-related  injuries from            its employer.  See Decker  v. Black and Decker Mfg.  Co., 389                           ___ _____________________________________            Mass. 35, 38 (1983); Whittle v. Pagani Bros. Constr. Co., 383                                 ___________________________________                                         -17-                                          17            Mass.  796, 800 (1981); see also Mass.  Gen. L. ch. 152,   23                                    ___ ____            (1988); Clarke v. Kentucky Fried Chicken of California, Inc.,                   _____________________________________________________            57  F.3d  21, 24  (1st  Cir.  1995)(describing provisions  of            workers'  compensation  statute).  This  is  especially  true            where,  as  in  this  case,  the  parties  to  the  agreement            allocating risk are  "sophisticated business entities." Canal                                                                    _____            Elec.,  406  Mass. at  374;  Deerskin Trading  Post,  Inc. v.            _____                        ________________________________            Spencer Press, Inc., 398 Mass. 118, 123 (1986).            ___________________                      Risk  allocation  agreements   are  common  in  the            construction   industry  and   are   widely-regarded   as   a            "reasonable  accommodation" between  parties to  a commercial            agreement.  See Canal Elec., 406 Mass. at 374; Jones v. Vappi                        ___ ___________                    ______________            Co., 28 Mass. App. Ct. 77 (1989); see also Debra A. Perelman,            ___                               ___ ____            Risk  Allocation  Through  Indemnity  Obligations  In Constr.            _____________________________________________________________            Contracts, 40 S.C. Law.  Rev. 989, 989-90 (1989).   They have            _________            the   advantage  of   allowing   owners,   contractors,   and            subcontractors  to  shift  the  significant  and, oftentimes,            unforeseeable risks inherent  in construction work.  Cf. Hill                                                                 ___ ____            Constr., 996 F.2d at 1317; Perelman, Risk Allocation, 40 S.C.            _______                              _______________            Law. Rev. at 989-90.   They also permit the  equipment needed            to complete construction  jobs to be obtained  at lower rates            because the lessors of such equipment can exclude the cost of            insuring against accident-related damages from  the equipment            price.  Cf. Hill  Constr., 966 F.2d at 1317.   In Shea v. Bay                    ___ _____________                         ___________            State  Gas  Co., 383  Mass.  218,  224  (1981),  the  Supreme            _______________                                         -18-                                          18            Judicial  Court  candidly   recognized  that   "realistically            viewed, the  shift of liability is  a shift in  the burden of            providing adequate insurance coverage."                            Nothing in the record suggests that Dunlop acted in            bad faith,  see Mass.  Gen. L. ch.  106   1-203  (1990), Hill                        ___                                          ____            Constr., 996 F.2d at  1317, or unfairly seeks to bind  RPM to            _______            an  indemnity clause which was  hidden or buried  deep in the            contract.  Compare Mobil Chemical Co. v.  Blount Bros. Corp.,                       _______ _________________________________________            809  F.2d 1175, 1182  (5th Cir. 1987).    Paragraph 12 shifts            liability  to   RPM  in  clear   and  unmistakable  language.            Additionally, the record makes it clear that RPM's president,            Paul Haven, a man  with more than twenty years  of experience            in the construction industry, knew or should have known about            the risk  allocation provisions  contained in  the agreement.            He negotiated the lease agreement and represented, in signing            it   on RPM's behalf, that  he had "read and  agree[d] to all            terms stated on  both sides of th[e]  form."  By Haven's  own            acknowledgement  indemnity clauses  of the sort  contained in            the Dunlop  lease agreement are standard  in the construction            industry.   Cf.  Perelman, Risk Allocation, 40 S.C. Law. Rev.                        ___            _______________            at  989-90 (Indemnity  provisions  in construction  contracts            should  be  interpreted by  "recognizing  the  intent of  the            parties  entering  into  the  agreement.").   We,  therefore,            conclude  that the  indemnity clause  contained in  the lease            agreement RPM executed with Dunlop is enforceable.                                         -19-                                          19                         Scope of the Indemnification Clause                          Scope of the Indemnification Clause                          ____________________________________                               Under Massachusetts Law                               Under Massachusetts Law                               _______________________                      In addition to attacking  the enforceability of the            indemnity  clause, RPM attacks  its scope.   It  argues that,            under  Massachusetts  law,   the  term  "use"  contained   in            paragraph  12  of the  agreement  cannot be  read  to include            liability  for claims brought on a theory of strict liability            instead of negligence.  See  Hayes v. Douglas Dynamics, Inc.,                                    ___  _______________________________            8  F.3d 88, 88 n.1 (1st Cir. 1993) ("Under Massachusetts law,            the   theory   of   breach   of  an   implied   warranty   of            merchantability  is basically  the same  as strict  liability            theory in tort."), cert. denied, 114 S. Ct. 2133 (1994).                                 _____ ______                      The  rule  that  indemnity  contracts  are   to  be            strictly construed  against the indemnitee  no longer obtains            in Massachusetts.  See Whittle, 383 Mass. at 797.  The modern                               ___ _______            rule  is that "'[c]ontracts of indemnity are to be fairly and            reasonably construed  in order to ascertain  the intention of            the  parties and  to  effectuate  the  purpose sought  to  be            accomplished.'"   Shea, 383 Mass.  at 222 (quoting  New York,                              ____                              _________            N.H.  & H.R.  Co. v.  Walworth Co.,  340 Mass.  1, 3  (1959).            __________________________________            Courts are expected to give effect to the parties' intentions            at  the time  of the  agreement and  to give  them reasonable            meaning.  Id.; see also Cohen v. Steve's Franchise Co., Inc.,                      ___  ___ ____ ____________________________________            927 F.2d 26, 28 (1st Cir. 1991); Polaroid, 416 Mass. at  694;                                             ________            Speers  v. H.P.  Hood, Inc.,  22 Mass.  App. Ct.  598 (1986),            ___________________________            review denied, 398 Mass. 1105 (1986).              ______ ______                                         -20-                                          20                      We  are not  impressed by  RPM's argument  that the            indemnity  clause's failure to  specifically refer  to strict            liability  claims omits such claims from its scope.  That the            clause  also fails to mention  claims brought on  a theory of            negligence   undermines   the   force   of   RPM's   argument            significantly  because  there  is   little  support  for  the            contention  that  the omission  of  a  specific reference  to            negligence  invalidates an  indemnity clause.   Massachusetts            cases such as Shea, 383 Mass.  219-20, "teac[h] that . . . an                          ____            indemnity provision may be  read to cover situations  of [an]            indemnitee's   negligence  although  there   is  no  explicit            statement  to that effect."   Speers, 22 Mass.  App. Ct. 598,                                          ______            601.  Where  the language  is broad and  the parties'  intent            relatively  clear, responsibility  for a  risk not  expressly            mentioned in the indemnity clause may be properly placed with            the indemnitor.  Cf.  Shea, 383 Mass. at 224-25.                             ___  ____                      We have little doubt that the language contained in            the  indemnity clause  is  broad enough  to encompass  claims            brought on a theory of either negligence or strict liability.            First, we  do  not agree  with  RPM that  private  agreements            allocating the risk  of strict liability for  tort damages in            the circumstances presented here  thwart public policy.  Such            agreements are reasonable accommodations in  the construction            industry  context.     Second,  the   language  contained  in            paragraph  12 of the lease  agreement is broad and expansive.                                         -21-                                          21            It absolves Dunlop for  "any responsibility or obligation" in            the   event  of   an  accident,   "regardless  of   cause  or            consequences," stemming from the use of its equipment.                        Similar  language  has  been  found  sufficient  to            encompass indemnification  obligations on claims brought on a            theory of strict liability.   See Beloit Power Sys.,  Inc. v.                                          ___ ___________________________            Hess Oil Virgin Islands  Corp., 757 F.2d 1427, 1428  (3d Cir.            ______________________________            1985) ("agrees to indemnify and hold harmless seller from all            claims  by third  parties which  extend beyond  the foregoing            limitations  on seller's  liability");  Midland Ins.  Co.  v.                                                    _____________________            Delta Lines, Inc., 530 F. Supp. 190 (1982)("all loss lessor .            _________________            . . may sustain  or suffer because  of . . .  the use of  the            equipment."); Mid-America  Sprayers, Inc.  v. U.S.  Fire Ins.                          _______________________________________________            Co., 8  Kan. App. 2d  451, 454 (1983)("any  responsibility or            ___            obligation  .  .  .  resulting  from  the  use  of  described            equipment");  see also  Berry v.  V. Ponte  & Sons,  166 N.J.                          ___ ____  __________________________            Super. 513, 517, cert. denied, 81 N.J.  271 (1979).  In Cohen                             ____________                           _____            v. Steve's Franchise  Co., Inc.,  927 F.2d 26,  29 (1st  Cir.            _______________________________            1991), we  interpreted a  franchise agreement executed  under            Massachusetts  law and held that the language contained in an            indemnity clause was broad enough to cover both negligent and            nonnegligent  business  decisions.   The clause  required the            franchisor  to indemnify  Steve's  Ice Cream,  Inc. "for  any            liability  arising 'by  reason  of an  act  or omission  with                                         -22-                                          22            respect to the business or operation of the STEVE'S ICE CREAM            STORE . . . .'"  Id. at 29.                               ___                      In  Polaroid Corp.  v.  Rollins Envtl.  Serv. (NJ),                          _______________________________________________            Inc., 416  Mass. 684 (1993), the Supreme  Judicial Court held            ____            that  an  indemnity  clause  encompassed  claims  for  strict            liability, even though it did not explicitly provide  for it.            Polaroid involved an indemnity  clause for liability and loss            ________            "for release or a substantial threat of  release of hazardous            substances."  Id. at 686.  The plaintiffs  in the case sought                          ___            a  determination that  the  hazardous waste  transporter with            whom    they   executed   the    contracts   containing   the            indemnification clauses, Rollins Environmental Services (NJ),            Inc., was obligated to  indemnify them against claims arising            from  a spill  at a  hazardous waste  storage facility.   The            language contained  in the indemnity clause  read in relevant            part:  "You  hereby  agree  to indemnify  and  save  Polaroid            harmless from  all liability  and loss arising  from services            performed by  you or your employees hereunder . . . ."  After            concluding  that the  private indemnity  agreements  were not            prohibited  by CERCLA, 42 U.S.C.   9607(e)(1), the court held            that the  clause was broad  enough to cover  strict liability            for hazardous waste damage imposed under CERCLA.  In reaching            this  conclusion, the  court found  that strict  liability in            tort for  ultrahazardous activities existed  in Massachusetts            at the  time the  parties entered  into their agreements  and                                         -23-                                          23            that  there was no outward  manifestation on the  part of the            indemnitor to  limit its  obligations under the  agreement to            negligence.                       Moreover,  paragraph 14  of the lease  convinces us            that the  parties intended  the indemnity agreement  to cover            all  liability  whether  grounded  in  negligence  or  strict            liability.   Paragraph  14 provides,  in relevant  part, "Our            insurance [Dunlop's]  does not  cover the equipment  while in            your possession [RPM's]."  It can be reasonably inferred from            this that the  parties intended RPM  to procure insurance  to            cover  the burden it assumed under the indemnity clause.  Cf.                                                                      ___            Speers, 22 Mass. App. Ct. at 601; see also Cohen, 927 F.2d at            ______                            ___ ____ _____            29.   That RPM  carried  $5 million  in liability  insurance,            whereas  Dunlop   carried  only  $1  million   supports  this            contention.   See  Midland  Insurance, 530  F.  Supp. at  194                          ___  __________________            (broad  language  of  agreement  and  existence of  increased            insurance is evidence of obligation to indemnify).   RPM gave            no indication  that it  intended to indemnify  for negligence            liability  only.    See  Polaroid,  416 Mass.  at  694  ("[A]                                ___  ________            contracting party's objective intention  dictates and a party            is bound by its outward manifestations to the other party.").            RPM cannot escape its obligations under the indemnity clause.                                    RPM's contention  that the indemnity  clause is not            conspicuous   and  cannot   shift  liability   for  defective                                         -24-                                          24            equipment does not deserve  extended comment.  The  clause is            printed  in  capital  letters.     Its  language  is  neither            ambiguous nor confusing.  The president of RPM testified that            he read  it and understood it.   At oral argument counsel for            RPM agreed that the lease was not a contract of adhesion.                      We  end our analysis by noting  that at the hearing            on  the  proposed  settlement between  the  MacGlashings  and            Dunlop, counsel  for RPM expressly approved  the structure of            the settlement and stated that it was fair and equitable.                                          V.                                          V.                      The judgments of  the district court  are affirmed.                      The judgments of  the district court  are affirmed.                      ___________________________________________________            There will be added to  the judgment amounts of $4,651,739.23            There will be added to  the judgment amounts of $4,651,739.23            _____________________________________________________________            and $306,032.52 such additional  post-judgment interest as is            and $306,032.52 such additional  post-judgment interest as is            _____________________________________________________________            due.            due.            ____                      Costs on appeal awarded to appellees.                      Costs on appeal awarded to appellees.                      _____________________________________                                         -25-                                          25
