Indemnity Provisions: Is the Subcontractor Responsible? What about

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Construction Defect Litigation
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National Business Institute
Indemnity Provisions: Is the Subcontractor
Responsible? What about the Design
Professional?
October 4, 2012
Wm. David Byassee, Esquire
William T. Slamkowski, Esquire
1099 18th St., Suite 2150, Denver, CO 80202
Phone: (303) 390-0003 • Fax: (303) 390-0177
[email protected][email protected] • www.jacksonkelly.com
The Difference Between “Defend,”
“Hold Harmless” and “Indemnity”
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• Hold harmless: “absolve (another party) from any
responsibility for damage or other liability arising from
the transaction; indemnify.”
• Duty to defend: “the obligation of an insurer to provide
an insured with a legal defense against claims of liability,
within the terms of the policy.”
• Indemnify: “to reimburse (another) for a loss suffered
because of a third party’s or one’s own act or default;
hold harmless. 2. To promise to reimburse (another) for
such a loss. 3. To give (another) security against such a
loss.”
Black’s Law Dictionary (9th ed. 2009).
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Colorado Law on Indemnity
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C.R.S. 13-21-111.5(6)(b)
(b) Except as otherwise provided in paragraphs
(c) and (d) of this subsection (6), 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.
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(c) The provisions of this subsection(6) shall not affect
any provision in a construction agreement that
requires a person to indemnify and insure another
person against liability for damage, including but not
limited to the reimbursement of attorney fees and
costs, if provided for by contract or statute, arising out
of death or bodily injury to persons or damage to
property, but not for any amounts that are greater than
that represented by the degree or percentage of
negligence or fault attributable to the indemnitor or the
indemnitor’s agents, representatives, subcontractors,
or suppliers.
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(d) (I) This subsection (6) does not apply to contract clauses
that require the indemnitor to purchase, maintain, and carry
insurance covering the acts or omissions of the indemnitor, nor
shall it apply to contract provisions that require the indemnitor to
name the indemnitee as an additional insured on the
indemnitor’s policy of insurance, but only to the extent that such
additional insured coverage provides coverage to the indemnitee
for liability due to the acts or omissions of the indemnitor. Any
provision in a construction agreement that requires the purchase
of additional insured coverage for damage arising out of death or
bodily injury to persons or damage to property from any acts or
omissions that are not caused by the negligence or fault of the
party providing such additional insured coverage is void as
against public policy.
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Common Law Indemnity
Joint and Several Liability
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Key Contract and Subcontract
Provisions, Including AIA and
Consensus DOCS
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AIA – A201 – 2007 (General Conditions)
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¶ 3.18
Indemnification
3.18.1 To the fullest extent permitted by law the Contractor shall
indemnify and hold harmless the Owner, Architect, Architect’s consultants,
and agents and employees of any of them from and against claims,
damages, losses and expenses, including but not limited to attorneys’ fees,
arising out of or resulting from performance of the Work, provided that such
claim, damage, loss or expense is attributable to bodily injury, sickness,
disease or death, or to injury to or destruction of tangible property (other
than the Work itself), but only to the extent caused by the negligent acts or
omissions of the Contractor, a Subcontractor, anyone directly or indirectly
employed by them or anyone for whose acts they may be liable, regardless
of whether or not such claim, damage, loss or expense is caused in part by
a party indemnified hereunder. Such obligations shall not be construed to
negate, abridge, or reduce other rights or obligations of indemnity that
would otherwise exist as to a party or person described in this Section
3.18.
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3.18.2
In claims against any person or entity
indemnified under this Section 3.18 by an
employee of the Contractor, a Subcontractor,
anyone directly or indirectly employed by them or
anyone for whose acts they may be liable, the
indemnification obligation under Section 3.18.1
shall not be limited by a limitation on amount or
type of damages, compensation or benefits
payable by or for the Contractor or a Subcontractor
under workers’ compensation acts, disability
benefit acts or other employee benefit acts.
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§ 1.1.3 The Work
The term “Work” means the construction and
services required by the Contract Documents,
whether completed or partially completed, and
includes all other labor, materials, equipment and
services provided or to be provided by the
Contractor to fulfill the Contractor’s obligations.
The Work may constitute the whole or a part of the
Project.
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AIA – A401 – 2007 (Standard Form of
Agreement Between Contractor and
Subcontractor)
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¶4.6
Indemnification
4.6.1
To the fullest extent permitted by law, the Subcontractor shall
indemnify and hold harmless the Owner, Contractor, Architect, Architect’s
consultants, and agents and employees of any of them from and against
claims, damages, losses and expenses, including but not limited to attorney’s
fees, arising out of or resulting from performance of the Subcontractor’s Work
under this Subcontract, provided that any such claim, damage, loss or expense
is attributable to bodily injury, sickness, disease or death, or to injury to or
destruction of tangible property (other than the Work itself), but only to the
extent caused by the negligent acts or omissions of the Subcontractor, the
Subcontractor’s Sub-subcontractors, anyone directly or indirectly employed by
them or anyone for whose acts they may be liable, regardless of whether or not
such claim, damage, loss or expense is caused in party by a party indemnified
hereunder. Such obligation shall not be construed to negate, abridge, or
otherwise reduce other rights or obligations of indemnity which would otherwise
exist as to a party or person described in this Section 4.6.
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4.6.2 In claims against any person or entity
indemnified under this Section 4.6 by an employee of
the Subcontractor, the Subcontractor’s Subsubcontractors, anyone directly or indirectly employed
by them or anyone for whose acts they may be liable,
the indemnification obligation under Section 4.6.1 shall
not be limited by a limitation on the amount or type of
damages, compensation or benefits payable by or for
the Subcontractor or the Subcontractor’s Subsubcontractors under workers’ compensation acts,
disability benefit acts or other employee benefit acts.
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AGC Document No. 410 – 11.1 (Owner
and Design-Builder)
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11.1.1 To the fullest extent permitted by law, the Design-Builder
shall defend, indemnify and hold harmless the Owner, Owner’s
officers, directors, members, consultants, agents and employees
from all claim for bodily injury and property damage (other than to
the Work itself and other property required to be insured under
Paragraph 11.5 owned by or in the custody of the owner), that may
arise from the performance of the Work, to the extent of the
negligence attributed to such acts or omissions by the DesignBuilder, Subcontractors or anyone employed directly or indirectly by
any of them or by anyone for whose acts any of them may be liable.
The Design-Builder shall not be required to defend, indemnify or
hold harmless the Owner, owner’s officers, directors, members,
consultants, agents and employees for any acts, omissions or
negligence of the Owner, the Owner’s officers, directors, members,
consultants, employees, agents or separate contractors.
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11.1.2
To the fullest extent permitted by law,
the Owner shall defend, indemnify and hold
harmless the Design-Builder, its officers, directors
or members, Subcontractors or anyone employed
directly or indirectly by any of them or anyone for
whose acts any of them may be liable from all
claims for bodily injury and property damage, other
than property insured under Paragraph 11.5, that
may arise from the performance of work by Others,
to the extent of the negligence attributed to such
acts or omissions by Others.
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AGC Document No. 420 – 7.1 (DesignBuilder and Architect/Engineer)
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7.1.1 In addition to any liability or obligation of the
Architect/Engineer to the Design-Builder that may exist under any
other provision of this Agreement or by law or otherwise, to the
fullest extent permitted by law the Architect/Engineer shall defend,
indemnify and hold harmless the Design-Builder and Owner and
their respective officers, agents, employees, consultants and
Subcontractors from and against claims, actions, proceedings,
liabilities, losses, damages, costs and expenses, including legal
fees, that may arise from the performance of the
Architect/Engineer’s Services, to the extent of the negligence
attributed to such acts or omissions by the Architect/ Engineer, its
offers, agents, employees or subcontractors, or anyone employed
directly or indirectly by any of them or by anyone for whose acts any
of them may be liable.
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7.1.2 To the fullest permitted by law, the DesignBuilder agrees to defend, indemnify and hold
harmless the Architect/Engineer, its officers,
agents and employees from and against claims,
actions, proceedings, liabilities, losses, damages,
costs and expenses, including legal fees, which
the Architect/Engineer, its officers, agents and
employees may sustain by reason of any negligent
act or omission by the Design-Builder, its officers,
agents, employees or Subcontractors arising out of
the Design-Builder’s Work.
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AGC Document No. 604 (Contractor and
Subcontractor)
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11. Indemnity To the fullest extent permitted by law,
Subcontractor shall defend, indemnify and hold harmless
Contractor, Contractor’s other subcontractors,
Architect/Engineer, Owner and their agents, consultants,
employees and others as required by this Agreement
from all claims for bodily injury and property damage that
may arise from performance of Subcontract Work to the
extent of the negligence attributed to such acts or
omissions by Subcontractor, Subcontractor’s
subcontractors or anyone employed directly or indirectly
by any of them or by anyone for whose acts any of them
may be liable.
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Sample Indemnity provisions in
GC/Subcontractor contract drafted by a GC:
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Subcontractor shall indemnify and hold harmless GC and Owner and all of their agents and
employees from and against all claims, damages, losses and expenses including attorneys’
fees arising out of or resulting from the performance of Subcontractor’s work under this
Subcontract, provided that any such claim, damage, loss or expense (a) is attributable to bodily
injury, sickness, disease, or death, or to injury to or destruction of tangible property (other than
the Work itself) including the loss of use resulting therefrom, and (b) is caused in whole or in
part by any negligent act or person employed by him or anyone for whose acts he may be
liable regardless of whether it is caused in part by a party indemnified hereunder. In any and
all claims against GC, Owner or any of their agents or employees by any employee of
Subcontractor, anyone directly or indirectly employed by him, or anyone for whose acts he may
be liable, the indemnification obligation under this paragraph shall not be limited in any way by
any limitation on the amount or type of damages, compensation or benefits payable by or for
Subcontractor under workmen’s compensation acts, disability benefit acts or other employee
benefit acts. The obligations of Subcontractor under this paragraph shall not extend to the
liability of the Architect, if any, its agents or employees, arising out of (1) the preparation or
approval of maps, drawings, opinions, reports, surveys, change orders, designs or
specifications, or (2) the giving of or the failure to give direction by such Architect, his agents or
employees provided such giving or failure to give is the primary cause of the injury or damage.
This agreement for indemnification will apply reciprocally between the Contractor and
Subcontractor.
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Alternative Indemnity provision between GC
and Subcontractor:
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Subcontractor shall indemnify and hold harmless Prime
Contractor, the Owner and their officers, directors, members,
employees, consultants, predecessors, successors and
assigns from and against all losses, suits, claims or damages
for or on account of bodily injury, property damage or personal
injury arising out of the performance of this Agreement by
Subcontractor or any of its employees, consultants, sub-tier
subcontractor or suppliers. Immediately upon notice of any
such loss, suit, claim or damage, Subcontractor shall, at its
sole expense and without a formal tender of defense, defend
Prime Contractor, Owner, and their officers, directors,
employees, consultants, predecessors, successors and
assigns with counsel approved by the Prime Contractor.
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The Additional Insured
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Before any work is commenced by Subcontractor
under this Subcontract, Subcontractor shall
provide contractor with a completed certificate(s)
of insurance or copies of such policies upon
request evidencing that all of the required
insurance coverages are in full force and effect
and that Contractor and other Indemnitees have
been properly named as additional insureds.
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All of Subcontractor’s liability coverage shall be
deemed primary insurance to any similar
insurance Contractor may obtain for its own
benefit, which shall be excess or secondary but
not contributing insurance.
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Subcontractor will indemnify Contractor against liability to third
parties, including claims, damages, losses, expenses, and
attorney fees that is the direct result of Subcontractor’s
performance of this Subcontract Agreement to the extent that
Subcontractor is at fault as agreed to in a settlement, or as
determined in a court judgment or arbitration. This provision is
contingent on (1) Contractor providing prompt written notice of
such a claim to Subcontractor, (2) Contractor granting
Subcontractor the right to participate in the defense of any such
claim, (3) if Contractor wins the case, there is no liability from
Subcontractor to Contractor, and (4) Subcontractor’s liability to
Contractor shall be proportional to the degree to which
Subcontractor’s liability to Contractor shall be proportional to the
degree to which Subcontractor is at fault with Contractor.
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Contractor will indemnify Subcontractor against liability to third
parties, including claims, damages, losses, expenses and
attorney fees that is the direct result of Contractor’s performance
or nonperformance of this Subcontract Agreement to the extent
that Contractor is at fault as agreed to in a settlement, or as
determined in a court judgment or arbitration. This provision is
contingent on (1) Subcontractor providing prompt written notice
of such a claim to Contractor, (2) Subcontractor granting
Contractor the right to participate in the defense of any such
claim, (3) if Subcontractor wins the case, there is no liability from
Contractor to Subcontractor, and (4) Contractor’s liability to
Subcontractor shall be proportional to the degree to which
Contractor is at fault with Subcontractor.
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Indemnity and the Economic
Loss Rule
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Standards of Care for Design
Professionals
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