{"id":490,"date":"2012-04-24T11:55:04","date_gmt":"2012-04-24T17:55:04","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=490"},"modified":"2012-04-24T11:55:04","modified_gmt":"2012-04-24T17:55:04","slug":"contractual-indemnity","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/contractual-indemnity\/","title":{"rendered":"Contractual Indemnity"},"content":{"rendered":"

Hubert J. “Hugh” Bell, Jr. – April 6, 2012<\/p>\n

Two recent decisions by Georgia appellate courts have addressed the issue of contractual indemnity. The Supreme Court of Georgia in the Kennedy Dev. Co., Inc. v. Camp, 290 Ga. 257 (2011) found that an indemnity provision in an assignment and assumption agreement was unenforceable. Kennedy, the developer of an upstream subdivision, assigned all of its rights and responsibilities to the upstream subdivision\u2019s homeowners\u2019 association. The previous owner of the land of the subdivision had entered into agreements with a downstream subdivision and its homeowner\u2019s association to permit the future upstream subdivision to use the lake on the downstream subdivision as its detention pond in exchange for a promise to make certain repairs and improvements to the pond and to maintain the pond. Camp owned some property adjacent to the downstream subdivision and alleged that the excess storm water from the upstream subdivision significantly increased the amount and velocity of the runoff from the downstream subdivision\u2019s lake which drained into a creek on Camp\u2019s property, resulting in erosion, tree loss, and other damage.<\/p>\n

Georgia\u2019s Anti-Indemnity Statute Interpreted<\/p>\n

The assignment agreement by Kennedy to the upstream subdivision\u2019s homeowners\u2019 association included a provision providing that the homeowners\u2019 association would hold Kennedy harmless from any debts, claims, actions, damages, judgments, or costs which arose prior to and after the agreement and are related to the construction, maintenance, repair, or operation of the subdivision. Georgia has a \u201canti-indemnity\u201d statute which makes certain indemnity agreements unenforceable if they meet two requirements. The provision must relate in some way to a contract for \u201cconstruction, alteration, repair, or maintenance\u201d of certain property and promises to indemnify a party for damages arising from that party\u2019s sole negligence. The first part has been interpreted broadly, including real property leases, design contracts, contracts with subcontractors, commercial and residential leases, in addition to traditional construction contracts.<\/p>\n

The Georgia Supreme Court found that the agreement satisfied the first part of the test and also satisfied the second part in that the agreement provided that the homeowners\u2019 association will indemnify and hold harmless Kennedy as to \u201cany\u201d or \u201call\u201d claims, \u201cno matter the origin of the claim or who is at fault.\u201d Therefore, the agreement satisfied both conditions for application of the anti-indemnity statute and the provision was therefore invalid.<\/p>\n

The teaching point here is that an indemnity provision may not be enforceable if it relates to the expansive view of construction, alteration, repair, or maintenance of property set forth in the Kennedy decision and if it purports to indemnify against the indemnitee\u2019s sole negligence.<\/p>\n

Indemnity Enforced<\/p>\n

The Georgia Court of Appeals in JNJ Foundation Specialists, Inc. v. D.R. Horton, Inc., 717 S.E. 2d 219 (Ga. App. 2011) found a contractor liable to the owner for damages claimed by a person injured in an automobile wreck. The injured person claimed that traffic control at the project was inadequate. The contract between the owner and the general contractor had a provision with language similar to that in the Kennedy case. It required Horton to indemnify and defend the owner as indemnitee for \u201cany claims\u201d arising out of or connected with the construction work. This indemnity agreement did not limit the contractor\u2019s liability to claims for which it or its subcontractors had been at fault. The Court of Appeals found that the indemnitor contractor had a duty to defend and hold harmless regardless of fault or causation.<\/p>\n

Since the contractor\u2019s CGL insurance policy covers harm caused by negligent acts but not the breach of a contractual duty, there may be no insurance coverage where the contractor\u2019s actions or inaction did not contribute to the harm. When such a broad indemnity provision is included in a contract, legal counsel should be consulted before executing the contract to modify the indemnification provision to provide that some act of the contractor must have contributed to the harm.<\/p>\n

via Contractual indemnity – Lexology<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Hubert J. “Hugh” Bell, Jr. – April 6, 2012 Two recent decisions by Georgia appellate courts have addressed the issue of contractual indemnity. The Supreme Court of Georgia in the Kennedy Dev. Co., Inc. v. Camp, 290 Ga. 257 (2011) found that an indemnity provision in an assignment and assumption agreement was unenforceable. Kennedy, the… Continue reading Contractual Indemnity<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14,9],"tags":[72,159,160],"class_list":["post-490","post","type-post","status-publish","format-standard","hentry","category-construction-2","category-construction-contracts","tag-construction-contracts-2","tag-erosion","tag-storm-water-runoff","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nContractual Indemnity - Advise & Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/contractual-indemnity\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Contractual Indemnity - Advise & Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Hubert J. “Hugh” Bell, Jr. – April 6, 2012 Two recent decisions by Georgia appellate courts have addressed the issue of contractual indemnity. 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