Precise Language in an Indemnity Provision is Essential

Jul 5, 2017

A California court rules that contract language take precedence over the doctrine of equitable indemnity.

The California Court of Appeals for the First District clarified how courts, at least in California, will interpret indemnity provisions in construction contracts. An article in the California Construction Law Blog by Garret Murai outlines the Court’s reasoning.

Oltmans Construction Company v. Bayside Interiors, Case No. A147313 (March 30, 2017) “examined the specific contract language contained in an indemnity provision and, more specifically, its ‘except to the extent of’ provision.”

In this case, an employee of a second-tier subcontractor was injured after falling through a roof opening for a skylight that was left improperly covered by an employee of the general contractor, Oltmans.

The injured man sued Oltmans and the owner. “Oltmans in turn filed a cross-complaint against Bayside [the subcontractor who hired the injured worker’s employee, O’Donnell Plastering] and O’Donnell alleging it was entitled to contractual indemnity from each of them and that Bayside had breached its contractual obligation to provide certificates of insurance certifying that Oltmans was an additional insured under liability policies required from subcontractors.”

Bayside contested its duty to indemnify arguing that because the accident was the result of negligence on the part of one of Oltmans employees, the doctrine of equitable indemnity applied. The lower court ruled in its favor.

The Court of Appeal reversed. “’Where , as here, the parties have expressly contracted with respect to the duty to indemnify, the extent of that duty must be determined by the contract and not by reliance on the independent doctrine of equitable indemnity.’”

As Mr. Murai points out, although the Court of Appeals ruled that the language in the contract between the parties in this case did not “clarify… that an indemnitee is entitled to indemnity ‘except to the extent a claim arises out of an indemnitee’s active negligence or willful misconduct, whether solely or otherwise,’” there is an open question as to what language would meet this standard.

Source—

Indemnitor Owes Indemnity Even Where Indemnitee is Actively negligent, California Court HoldsGarret Murai, California Construction Law Blog, June 5, 2107.