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Where an indemnification clause in a construction subcontract was so broad as to require the subcontractor to indemnify a project owner and construction manager for their own negligence, a court held the clause could not be enforced during a summary judgment motion requested by the indemnities.  The clause could only be saved if it were proved that the indemnitees were not themselves negligent, and that determination would have to await the outcome of the trial on the facts.

In Lanarello v. City University of New York, 774 N.Y.S. 2d 517 (2004), the court considered the enforceability of an indemnification clause that required the subcontractor to “indemnify the owner and construction manager [Morse Diesel]  for any and all losses they sustain as a result of any or all injuries to any and all persons arising out of or occurring in connection with [subcontractor’s] work, excepting only injuries that arise out of faulty designs or affirmative acts of the owner or construction manager committed with the intent to cause injury.”  The court concluded that this clause would indemnify the owner and construction manager for their own negligence and therefore “runs afoul of General Obligations Law section 5-322.1(1) of New York.

Morse Diesel, the construction manager (“CM”) was asking the court to enforce the indemnity clause by way of a summary judgment motion to grant it judgment against the subcontractor.  It argued that to the extent that the clause did not require the subcontractor to indemnify the CM for the CM’s own negligence the clause would be saved by another clause in the contract providing that “each and every provision of law and clause required by law to be inserted in the Contract shall be deemed to be inserted therein.”  In rejecting that argument, the court stated “Such language is not equivalent to language in the indemnification clause itself limiting a subcontractor’s indemnification obligation ‘to the extent permitted by law.’”

The Motion court that denied the summary judgment motion found that Morse Diesel had more than a mere general supervisory authority with regard to one of its subcontractor’s who had responsibility for cleaning up debris and providing temporary protection around openings.  Since negligence in those respects may have contributed to the accident, it would be necessary to allow the matter to go to trail so that it could be determined based on all the facts whether or Morse Diesel was negligent or not.

Practice Note: It is important to include a “survival” or “saving clause” directly inside the indemnification article so that if for any reason a court finds the indemnity language to be in violation of public policy or a state anti-indemnity statute, the article will nevertheless survive as language that falls back to that which is permissible under public policy and state law.  This is often accomplished by introducing the article with language such as, “To the fullest extent permitted by law, the Contractor shall indemnify the Client ….”   This may be more persuasive with a court than was the general saving clause that the court declined to apply in this particular case.

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 6, No. 6 (Sep 2004).

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