Legal Implications of Contractual Indemnity and Statute of Repose in Design Contracts

In a landmark decision with far-reaching consequences for insurers and design professionals, the Massachusetts Supreme Judicial Court issued a pivotal ruling on April 16, 2025. This decision, in the case of Trustees of Boston University v. Clough, Harbour & Associates LLP, concluded that a contractual indemnity claim by Boston University against its architect was valid despite the claim being filed beyond the six-year statute of repose for tort lawsuits in Massachusetts. This ruling clarifies the distinction between contract-based and tort-based liabilities, asserting that explicitly negotiated indemnity provisions can remain enforceable beyond statutory time limits prescribed by General Laws chapter 260, section 2B, which generally restricts tort claims relating to design defects in real property to a six-year window.

The origins of this dispute date back to a 2012 contract between Boston University and Clough, Harbour & Associates LLP (CHA), wherein CHA was tasked with designing a synthetic turf athletic field, including the parking structure below. The parties involved, both sophisticated in nature, had negotiated a specific indemnification clause requiring CHA to reimburse the university for 'any and all' expenses, including legal fees, resulting from CHA’s negligence. The university inaugurated the sporting field on August 31, 2013, but soon after discovered structural flaws due to poor accommodation for joist expansion. This issue led to field depressions that rendered the area unsafe, necessitating repair expenditures exceeding $25,000 for which the university sought restitution under the indemnity provision. However, CHA refused, prompting the university to initiate legal proceedings on July 2, 2020, in Suffolk Superior Court for breach of indemnity.

CHA’s defense hinged on the argument that the claim was prohibited by the tort statute of repose. However, the trial judge, heavily leaning on the Appeals Court's unpublished decision in 2023 concerning University of Mass. Building Authority v. Adams Plumbing & Heating, Inc., sided with CHA, granting the motion for summary judgment. Upon direct review, the Massachusetts Supreme Judicial Court reversed this decision. The court noted the university's claim was not pertaining to torts but rather to enforce a contractual indemnity promise. As articulated by Justice Wendlandt, representing a unanimous court, General Laws chapter 260, section 2B, exclusively references 'actions of tort' and does not extend to claims that rely on clearly defined contractual responsibilities.

This judgment brings to light significant points for insurers dealing with professional liability coverage for architects and engineers. While not explicitly an insurance case, the ruling emphasizes the potential long-term exposure for insurers when dealing with indemnity agreements. Such indemnity clauses are crucial and are often hotly negotiated, yet they may not be automatically covered or could require specific endorsements under policy terms. Furthermore, the indemnification clause in the Boston University case was not part of the standard American Institute of Architects’ (AIA) Form B101-2007, illustrating the need for tailored and thorough contract drafting and review. The court’s ruling pointedly assures that the agreed upon duties within an indemnification clause — even those incorporating negligence standards — surpass statutory restrictions of tort time bars. This outcome holds crucial relevance for insurers, risk managers, and professionals engaged in extensive design and construction projects, underscoring the indispensable role of a well-negotiated contract that clearly outlines the obligations and lifespan of indemnity agreements.