30 N.E.3d 105
Mass.2015Background
- December 8, 2006: NSTAR employees performing a switching procedure caused an explosion and fire at One Broadway, Cambridge, damaging the building and causing lengthy interruption of occupants’ businesses.
- Insurers (Maryland Casualty and Assurance) paid claims for business interruption and property damage on behalf of tenants (Cambridge Incubator, Sedo, Allodia) and sued NSTAR for negligence, gross negligence/willful and wanton misconduct, breach of contract, and warranties.
- NSTAR moved for partial summary judgment, relying on a DPU‑approved tariff (filed Jan. 31, 2006) containing a "Limitation of Liability" clause that disclaims liability to nonresidential customers for "special, indirect, or consequential damages" (including business interruption), and purports to limit tort liability "including negligence and G. L. c. 93A."
- The Superior Court held the tariff authentic, construed the clause to cover gross negligence/willful and wanton misconduct claims for consequential damages by nonresidential customers, and barred recovery of business interruption/economic damages; limited property damage claims survived.
- Parties entered a stipulated judgment for property damage to Cambridge Incubator; plaintiffs appealed the partial summary judgment ruling barring consequential damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authenticity of tariff | Discrepancies in submitted copies create a genuine factual dispute | DPU cover letter with official seal authenticates tariff | Tariff authenticated; pagination differences immaterial |
| Scope of "Limitation of Liability" clause | Parenthetical ("including negligence and G. L. c. 93A") shows clause limits only ordinary negligence and c.93A claims | Clause covers tort liability generally ("in tort (including...)" and "or otherwise" language) | Clause unambiguously covers torts broadly, including gross negligence/willful and wanton misconduct for consequential damages |
| Enforceability of tariff limitation for gross negligence | Contract law prohibits releases for gross negligence; such rule should apply | Tariffs are quasi‑statutory, approved by DPU, and may lawfully limit liability subject to reasonableness review | Tariff limitation enforceable as a matter of law; rule against contractual releases for gross negligence does not control in tariff context |
| Reasonableness of limiting consequential damages to nonresidential customers | Any tariff limiting liability for gross negligence is per se unreasonable | Limitation targets a defined class (nonresidential under general rates) and a particular damage category (consequential losses), and is subject to DPU scrutiny | Limitation is reasonable and within DPU authority; bars recovery for business interruption/economic damages |
Key Cases Cited
- Western Union Tel. Co. v. Priester, 276 U.S. 252 (U.S. 1928) (tariff regime displaces contract law and limits ability to evade tariff limitations by labeling negligence as "gross")
- Disk 'N' Data, Inc. v. AT&T Communications, 415 Mass. 886 (Mass. 1993) (public utilities may limit liability by properly filed and approved tariffs)
- Wilkinson v. New England Tel. & Tel. Co., 327 Mass. 132 (Mass. 1951) (tariff/rate regulation must satisfy reasonableness; courts defer to regulatory approval)
- FMR Corp. v. Boston Edison Co., 415 Mass. 393 (Mass. 1993) (extensive legislative regulation removes utility service from ordinary contract law)
- Ellis v. American Tel. Co., 13 Allen 226 (Mass. 1866) (early contract‑based recognition of notice‑based limitation of liability for telegraph companies)
- Altman v. Aronson, 231 Mass. 588 (Mass. 1919) (distinguishing ordinary negligence, gross negligence, and willful/wanton misconduct)