A contractor was hired via a Master Services Contract to provide various services and equipment to supply electrical power to an onshore oil and gas lease wellsite. The MSC contained a broad indemnity provision requiring the contractor to indemnify the Owner from all claims even if caused by the Owner. While a laborer of the contractor was performing work on damaged equipment to restore power, an arc flash occurred, causing him burns and physical injuries. That laborer filed suit against the Owner alleging negligence of both the contractor and the owner. The Owner tendered the claim to the Contractor and demanded it defend and indemnity the Owner. When the Contractor refused to do so, the Owner sued from breach of contract – that being the failure to defend and indemnify pursuant to the terms of the indemnity article. Based on the state anti-indemnification statute, the court granted summary judgment to the contractor because the clause was deemed void and unenforceable because the statute prohibits indemnity of claims caused by the negligence of the indemnitee/owner. The court rejected the Owner’s assertion that the contract was not for construction and the indemnity clause should not apply. BKV BARNETT, LLC v. ELECTRIC DRILLING TECHNOLOGIES, LLC, Defendant, 2024 WL 4308184, United States District Court, D. Colorado (2024).
Colorado’s Anti-Indemnification Statute provides that
“any provision in a construction agreement that requires a person to indemnify, insure, or defend in litigation another person against liability for damage arising out of death or bodily injury to persons or damage to property caused by the negligence or fault of the indemnitee or any third party under the control or supervision of the indemnitee is void as against public policy and unenforceable.”
The indemnification clause in this contract stated:
“4. INDEMNITY
4.1 CONTRACTOR AGREES TO INDEMNIFY, DEFEND, RELEASE, PROTECT AND SAVE HARMLESS COMPANY GROUP FROM AND AGAINST ANY AND ALL LOSSES, CAUSES OF ACTION, CLAIMS, DEMANDS, ALLEGATIONS, JUDGMENTS, DEFENSE COSTS, OR SUITS INCLUDING, BUT NOT LIMITED TO, CLAIMS, DEMANDS, JUDGMENTS OR SUITS FOR PROPERTY DAMAGE, BODILY INJURY, ILLNESS, DISEASE, DEATH, LOSS OF SERVICES OR WAGES, OR FOR LOSS OF CONSORTIUM OR SOCIETY (ALL OF THE FOREGOING, COLLECTIVELY, “CLAIMS”) MADE OR ASSERTED BY, OR ARISING IN FAVOR OF, ANY MEMBER OF CONTRACTOR GROUP (OR THEIR SPOUSES, RELATIVES, DEPENDENTS, OR ANY LEGAL
REPRESENTATIVES), OR BASED ON OR ARISING OUT OF SUCH CLAIMS, IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISING OUT OF OR RELATED TO THE PERFORMANCE OF THIS CONTRACT OR THE USE BY ANY MEMBER OF COMPANY GROUP OR CONTRACTOR GROUP OF, OR THEIR PRESENCE ON, ANY
PREMISES OR FACILITIES OWNED, OPERATED, CHARTERED, OR CONTROLLED BY COMPANY GROUP OR CONTRACTOR GROUP OR USED FOR TRANSPORTATION (INCLUDING, BUT NOT LIMITED TO, ANY STRUCTURE, PLATFORM, AIRCRAFT, VESSEL, OR OTHER PREMISES) OR FOR INGRESS AND EGRESS BY COMPANY GROUP OR CONTRACTOR GROUP, EXPRESSLY INCLUDING ANY CLAIMS ACTUALLY OR ALLEGEDLY CAUSED BY THE UNSEAWORTHINESS OR UNAIRWORTHINESS OF VESSELS OR CRAFT, OR THE SOLE, CONCURRENT, OR PARTIAL NEGLIGENCE (OF WHATEVER NATURE OR CHARACTER), FAULT, OR STRICT LIABILITY OF ANY MEMBER OF COMPANY GROUP, AND WHETHER OR NOT SUCH NEGLIGENCE, FAULT, STRICT LIABILITY, UNSEAWORTHINESS, OR UNAIRWORTHINESS PREDATES THE DATE OF EXECUTION OF THIS CONTRACT; PROVIDED, HOWEVER, THAT THE FOREGOING OBLIGATIONS OF CONTRACTOR TO INDEMNIFY, DEFEND, AND SAVE COMPANY GROUP HARMLESS SHALL NOT APPLY TO THE EXTENT THAT ANY SUCH CLAIMS ARE CAUSED BY, RESULT FROM, OR ARISE OUT OF OR FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY MEMBER OF COMPANY GROUP.”
The Colorado anti-indemnification statute defines “construction agreement” as:
“A contract, subcontract, or agreement for materials or labor for the construction, alteration, renovation, repair, maintenance, design, planning, supervision, inspection, testing, or observation of any building, building site, structure, highway, street, roadway bridge, viaduct, water or sewer system, gas or other distribution system, or other work dealing with construction or for any moving, demolition, or excavation connected with such construction.”
In this case, the Owner/indemnitee argued that the MSC was not a construction contract and that the parties merely contracted for the Contractor to provide electrical power to the site. With no citation to the record, BKV contends that “[a]ny work, including installing or repairing damaged electrical equipment, was incidental to EDT’s contractual obligations to provide electrical power to the site and its drilling operations. As such, the sole purpose of BKV and EDT’s contract was for EDT to provide electrical power to BKV’s site and its drilling operations.”
In reviewing the facts of this case, the court noted:
the following work was performed in March 2022: (a) “install[ed]” a “Utility Pole,” “overhead wires,” “[a]bove ground cable,” and “drive- overs;” (b) “set 2 pad mounted switches;” and (c) “repair[ed] overhead cable.” Docket No. 40-5. EDT also provided a “Crane to Load and Unload standard load items.”
“ … it is undisputed that the March 2022 Invoice shows that EDT performed to Load and Unloadstandard load items.” Id.”
The Court finds that the parties’ agreement for EDT to perform work in March 2022 is a “construction agreement” under the Anti-Indemnification Statute because the agreement involved “materials or labor for the construction, alteration, renovation, [or] repair … of any … structure.” …. EDT installed a “Utility Pole” at the Site. Docket No. 40-5. A utility pole constitutes “materials” and when installed constitutes a “structure.” EDT also repaired “overhead cable,” see id., which constitutes the “repair” of a “structure.” Because EDT’s work involved the construction and repair of a structure, the Court finds that the parties’ agreement is a “construction agreement” under Colo. Rev. Stat. § 13-21-111.5(6)(e)(I). See Higby Crane Servs., 703 F. App’x at 693 (finding, at the summary judgment stage, that a work order issued pursuant to a master services contract constituted a “construction agreement” under Colo. Rev. Stat. § 13-21-111.5(6)(e)(I) because it was undisputed that the work order showed that appellant “[p]ulled off end caps to plug tubes on heat exchangers” at “a gas processing plant”); Cont’l Ins. Co. v. Cintas Corp. No. 2, No. 18-cv-00254RBJ, 2019 WL 4643711, at *5-6 (D. Colo. July 12, 2019) (holding that a contract was a “construction agreement” under section 13-21-111.5(6)(e)(I) because the defendant repaired a “dry pipe system” in a building, and thus, the indemnification provision in the contract was void).
As a result of finding the work to constitute “construction”, the court held that the indemnity clause was void and unenforceable.
Comment: Indemnity clauses are the source of much contract negotiation. When reviewing design professional contracts, my office seeks to revise the clause so that the design professional does not agree to defend the indemnitee against any professional liability claims because there is no insurance coverage for that obligation. We also revise the clause to state that the design professional will only indemnify against damages arising from third party claims and demands to the extent caused by the negligent acts, error or omissions of the designer. Going broader than that will create uninsurable exposure due to the “contractual liability exclusion” contained in the liability policies.
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. 27, No. 6 (October 2025).
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