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By: Kent Holland

A contract required the architect to indemnify its project owner client (a hotel) against damages and attorneys fees arising from injuries on hotel property. The hotel, architect and others entered into settlement agreements with a plaintiff that alleged slip and fall injuries. The hotel then sought to recover what it paid the plaintiff from the architect pursuant to the indemnification clause.

Despite being named an “indemnification clause”, the affect of the clause in this case was to require “contribution” by the architect toward the damages paid by the hotel. The right to contribution is established by a state “Contribution Act” that provides that a tortfeasor who enters into a good-faith settlement with a claimant is discharged from all liability for any contribution to any other tortfeasor and may not recover contribution from another tortfeasor whose liability in not extinguished in the settlement.

All the parties having entered into good faith settlements with the plaintiff, the court held that the hotel could not subsequently rely upon the contractual indemnity/contribution clause to recover its attorneys fees from the architect since such relief would be contrary to the public policy set by the Contribution Act. Sandlin v. Harrah’s Illinois Corporation, 62 N.E. 3d 362 (Illinois 2017).

The indemnity clause in question was as follows:

“5.1 Indemnification. To the fullest extent permitted by law, Architect, on behalf of itself and its agents (all of said parties are herein sometimes collectively referred to as the ‘Indemnitors’), shall fully indemnify, defend, save and hold Owner, its partners, all successor owners and/or partners and their agents, employees, partners and anyone else acting for or on behalf of any of them (all of said parties are herein collectively referred to as the ‘Indemnitees’) harmless from and against all liability, damage, loss, claims, demands, actions and expenses of any nature whatsoever including, but not limited to reasonable attorney’s fees which arise out of or are connected with, or are claimed to arise out of or be connected with: (i) any negligent act, error or omission or any willful misconduct or other fault by any Indemnitor in the performance of any services to be performed hereunder; (ii) any failure to comply with applicable laws, codes, rules, regulations or ordinances; (iii) any breach of any obligations of Indemnitors as set forth in this Agreement.”

 

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. 19, No. 8 (Aug 2017).

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