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Subcontract excavator owed a duty to indemnify and defend the prime contractor installing underground utility lines for a telecommunications company.   Two important holdings were (1) a state statute applicable to certain construction contracts, which prohibits indemnity for ones own negligence, did not apply to the excavation contract where no buildings or structures were being built as part of the work and (2) incorporation by reference of the prime agreement did not entitle the prime contractor to indemnification since it did not expressly state that subcontractors must indemnify the prime. Block Bldrs v. Katryniok, 2018 WL 1940951, (Fl. 2018).

After Blok performed excavation near the driveway in one of the neighborhoods covered by the project, a homeowner was walking down his driveway when it suddenly collapsed, causing him to fall and sustain permanent serious injuries. The homeowner sued Blok for damages due to his injuries and then amended his complaint to add Mastec and BellSouth for their own negligence in contributing to the dangerous condition.

The prime contractor [Mastec] and BellSouth crossclaimed against Blok, alleging that Blok had agreed to contractually indemnify them through the subcontract between Blok and Mastec. The contract between Blok and Mastec contained a provision requiring Blok to indemnify Mastec for Mastec’s own negligence:

Indemnification. a) Subcontractor [Blok] agrees to indemnify and hold harmless Contractor [Mastec] and its directors, officers, employees and agents (collectively the “Indemnitees”) and each of them from and against any loss, costs, damages, claims, expenses (including attorneys’ fees) or liabilities, causes of action, lawsuits, penalties, or demands (collectively referred to as “Liabilities”) by reason of any injury to or death of any person or damage to or destruction or loss of any property arising out of, resulting from, or in connection with (i) the performance or nonperformance of the Work contemplated by this Agreement which is or is alleged to be directly or indirectly caused, in whole or in part, by any act, omission, default, negligence (whether active or passive) of Subcontractor or its employees, agents or subcontractors, regardless of whether it is, or is alleged to be, caused in whole or part (whether joint, concurrent, or contributing) by any act, omission, default or negligence (whether active or passive) of the Indemnitees, or any of them … Said indemnity shall include but not be limited to injury or damage which is or is alleged to be caused in whole or in part by any act, omission, default or negligence of Subcontractor or its employees, agents or subcontractors….

*2 c) Where not specifically prohibited by law, Subcontractor further specifically agrees to indemnify and hold harmless the Indemnitees from all Liabilities, by reason of any injury, death, or damage to any person or property whatsoever, caused by, arising from, incident to, or connected with the performance or nonperformance of the work contemplated by this Agreement which is, or is alleged to be, caused in part (whether joint, concurrent, or contributing) or in whole by any act, omission, default, or negligence (whether active or passive) of the Indemnitees.

The contract also required Blok to defend any claim arising out of the performance of the contract and brought against the Indemnitees, as well as to pay any costs and attorney’s fees incurred by the Indemnitees in defending any action or in enforcing the indemnification agreement.

The agreement between the excavator and prime contractor incorporated the terms of the contract between the contractor and BellSouth. The indemnification clause in that contract provided the following:

Article 9. Indemnity

The Contractor [Mastec] shall indemnify and hold harmless the Company [BellSouth] and its directors, officers, employees and agents (collectively the “Indemnitees”) and each of them from and against any loss, costs, damages, claims, expenses (including attorneys’ fees) or liabilities (collectively referred to as “Liabilities”) by reason of any injury to or death of any person or damage to or destruction or loss of any property arising out of, resulting from, or in connection with (i) the performance or nonperformance of the work contemplated by this Contract which is or is alleged to be directly or indirectly caused, in whole or in part, by any act, omission, default, negligence (whether active or passive) of Contractor or its employees, agents or subcontractors, regardless of whether it is, or is alleged to be, caused in whole or part (whether joint, concurrent or contributing) by any act, omission, default or negligence (whether active or passive) of the Indemnitees, or any of them ….

(emphasis added).

The trial court granted summary judgment against the excavator, concluding it must indemnify both the prime contractor and telecommunications company. As to any duty of the excavaotor to indemnify Bell South, however, the court held that the flow down provisions of the prime agreement did not require subcontractor indemnification of Bell South. The court stated:

As to BellSouth, we conclude that the court erred in determining that Blok owed a duty   of indemnity and a duty to defend BellSouth. Under the Blok/Mastec contract, Blok agreed to indemnify Mastec and its directors, officers, and agents. Nowhere does it require Blok to indemnify BellSouth. And, although the subcontract incorporated the provisions of the BellSouth/Mastec contract, that contractual indemnification provision required that Mastec, not its subcontractors, indemnify BellSouth.

Comment: The part of the decision addressing the impact of the incorporation of reference is quite significant. In reviewing contracts on behalf of design subconsultants and construction subcontractors it is not uncommon to have the prime include language in the subcontract that expressly requires the sub to indemnify the project owner. But when we review the prime agreement we may find that the agreement only requires the prime to indemnify the owner and is silent concerning the subcontractor. In that instance, we want to revise the subcontract indemnity clause so that our subcontractor does not contractually commit to indemnify the project owner

 

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. 20, No. 7 (Aug 2018).

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