Christopher G. Hill | Construction Law Musings
Remember the Uniwest case that stated that Va. Code 11-4.1 renders an indemnification provision unenforceable if it requires indemnification for the indemnitee’s actions? I’ve discussed it on several occasions and in contexts from applicability to architects to whether it is the operation of an indemnity clause, even where the clause itself would be valid, that can make an indemnity provision unenforceable. Well, another wrinkle on this analysis popped up in a case out of the Eastern District of Virginia Federal Court in Norfolk. In ZP No. 332, LLC v Huffman Contractors, Inc. et. al., the Court allowed for an exception to the “Uniwest” rule, at least at the Motion to Dismiss stage.
In the ZP No. 32 case, Huffman Contractors, Inc. was sued by ZP and one of the counts was for indemnification under a clause that was, at first blush, almost identical to the unenforceable one in Uniwest. The relevant portions of the indemnity clause for Huffman’s purposes were as follows:
To the fullest extent permitted by law, the Contractor shall indemnify, reimburse, hold harmless, and defend the Owner . . . from and against claims, damages, losses, and expenses, including, but not limited to, attorneys’ fees (collectively a ‘Loss’), arising out of or resulting from performance of the Work . . . regardless of whether such claim, damage, loss[,] or expense is caused in part by a party indemnified hereunder.
Huffman argued, and (absent some language outlined below) I would agree that this clause fails under Uniwest and Virginia statute. The Court agreed that, if this were the end of things, the indemnity claim would fail. But, as they say in every infomercial ever made, that’s not all. The Court went on to quote the remainder of the indemnity provision that stated:
[i]f the [w]ork is to be performed in a state that prohibits any part of the indemnity coverage contained herein, the Contractor shall provide the maximum indemnity coverage allowed by that state to each of the Indemnified Parties.
The Court went on to discuss the clause, found in almost every construction contract I’ve read that states essentially that if one part of this contract is invalid, the remainder survives and held that ZP had, at least at this early stage, plead enough damages from non-indemnitee actions to survive Uniwest and Huffman’s Motion to Dismiss. In short, the Court stated that the language above saves that portion of the indemnity requirement while throwing out the “illegal” portion of the indemnity clause. As always, read the case for yourself and consider that this is a case at its early stages and much is left to be determined when doing so.
My take? If this analysis prevails, much of the protections of Uniwest and Va. Code 11-4.1 are stripped away by simply stating that you mean to have max indemnity allowable by law. I also don’t think it will be a huge issue for Virginia based contractors that work in Virginia as I’ve seen the sorts of overbroad clauses stricken by Uniwest due to the good work of experienced Virginia construction attorneys. I also recommend that any construction professional or company get the advice from such a lawyer when drafting the indemnity provisions of its construction contract.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.