A laborer was injured when he fell from scaffolding that collapsed while he was performing masonry work. He sued a number of entities and individuals involved in the project for Wegmans Food Markets. Aeroteck, Inc. is one entity that was sued based on its having staffed the project work with a construction foreman, as agreed upon in a staffing agreement with Wegmans. By separate contract, Wegmans hired MP Masonry, the employer of the injured worker. MP’s contract contained an indemnification clause requiring MP to indemnify Wegmans and “its agents, employees and representatives….” Aerotek filed a cross claim against MP to enforce the indemnification obligation based on the argument that MP was an “agent” of Wegmans. The court dismissed the indemnity claim – concluding that the word “agent” is too ambiguous to conclude that Aerotek was an intended indemnitee, and that if the parties had intended the foreman and Aeroteck to be Indemnitees of MP they could have done so “in unmistakable terms.” Fireman’s Insurance Co of Washington, D.C. v. ACE American Insurance Company, 465 F. Supp. 3d 254 (Western District, D.C., NY 2020).
The indemnification clause in this case provided the following:
“To the fullest extent permitted by law, [MP Masonry] shall defend, indemnify and hold harmless [Wegmans] and its agents, employees and representatives from and against all liabilities, claims, damages, loss and expenses, including, but not limited to, claims of personal injury to [MP Masonry’s] employees, agents, subcontractors or third parties … arising out of or resulting directly or indirectly from the performance of the Work….”
In analyzing this indemnity clause, the Federal District Court explained that New York courts are particularly strict when it comes to contractual indemnification. It is not enough, says the court, that an indemnification clause “might be reasonably read to cover an individual; it must be unambiguous that the individual is covered.” “That standard is demanding, and it is particularly difficult to meet if the parties employ language like ‘employees’ or ‘agent’ to refer to potential Indemnitees.”
The court further states, “The risk of an overly broad reading is present here, as words like “agents,” “employees,” and “representatives” are ambiguous and can readily be interpreted in a manner not intended by the parties. Indeed, one New York court has noted that the word “agent” is often a “referentially treacherous term” that fails to clearly manifest the parties’ intentions. [citation omitted]. The question here is whether, despite the inherent ambiguity of the terms themselves, the masonry contract as a whole states in “unmistakable terms” that Mr. Story is a covered indemnitee. The Court answers that question in the negative.”
In reaching that conclusion the court stated, “If the parties had intended to extend indemnification to the employees of other contractors, they could have simply used those phrases rather than the amorphous terms they did employ.” “In short, if Wegmans and MP Masonry had intended to extend indemnification to [the foreman], they could have done so ‘in unmistakable terms….’”
Risk Management Comment: In reviewing and negotiating indemnification clauses, our office typically strikes out the words “agents and representatives” for reasons like those explained by the court in this decision. Moreover, there are courts in some states that have enforced indemnification of a party such as construction manager that the courts found to be “agents.” If the owner intends a specific party to be indemnified as an “agent” we ask them to specifically identify that party or individual rather than rely on the ambiguous term “agent.”
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 ConstructionRisk 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 Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 23, No. 2 (April 2021).
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