{"id":903450,"date":"2024-10-17T15:02:53","date_gmt":"2024-10-17T21:02:53","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=903450"},"modified":"2024-10-17T15:02:55","modified_gmt":"2024-10-17T21:02:55","slug":"contractual-indemnity-construction-contract-key-drafting-considerations","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/contractual-indemnity-construction-contract-key-drafting-considerations\/","title":{"rendered":"Alabama Supreme Court\u2019s Recent Ruling on Indemnity Clauses Could Impact Construction Contracts: Key Drafting Considerations"},"content":{"rendered":"\n<p>J. Christopher Selman and Zachary B. Stewart | <a href=\"https:\/\/www.buildsmartbradley.com\/2024\/10\/alabama-supreme-courts-recent-ruling-on-indemnity-clauses-could-impact-construction-contracts-key-drafting-considerations\/?utm_source=Bradley+Arant+Boult+Cummings+LLP+-+BuildSmart&amp;utm_campaign=25160fecb2-RSS_EMAIL_CAMPAIGN&amp;utm_medium=email&amp;utm_term=0_b504caf31b-25160fecb2-78863422\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">BuildSmart<\/a><\/p>\n\n\n\n<p>Hark! A recent Alabama Supreme Court indemnity decision,\u00a0<em>Mobile Infirmary Association v. Quest Diagnostics Clinical Laboratories<\/em>, may require you to retrieve your drafting pen. Although not a case involving a construction dispute,\u00a0<em>Mobile Infirmary\u00a0<\/em>does address a key component of risk shifting in construction contracts \u2014 the indemnity clause. Put simply, <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/contractual-indemnity\/\">contractual indemnity<\/a> is the right of one party (the indemnitee) to claim reimbursement for a loss from another party (the indemnitor). Unlike nearly every other state, Alabama does not (yet) statutorily restrict when indemnity clauses between project owners, general contractors, and subcontractors are enforceable. Instead, its courts decide an indemnity clause\u2019s validity through different enforcement tests (depending on the type of clause at issue).<\/p>\n\n\n\n<p>Alabama\u2019s construction industry most commonly uses three indemnity forms (listed from the most to least expansive): broad-form, intermediate-form, and limited-form indemnity.&nbsp;Broad-form indemnity obligates an indemnitor to pay for its indemnitee\u2019s covered tort liability, even if the indemnitee is solely at fault. Intermediate-form indemnity obligates an indemnitor to pay for its indemnitee\u2019s covered tort liability, so long as the indemnitor is at least partially at fault.&nbsp;Limited-form indemnity obligates an indemnitor to pay for an indemnitee\u2019s covered tort liability but solely to the proportionate share that the indemnitor is at fault.<\/p>\n\n\n\n<p>When an indemnity clause shifts liability for an indemnitee\u2019s own fault (e.g., with broad or intermediate-form indemnity), Alabama courts have considered the clarity of the language used, the sophistication of the parties, and the indemnitee\u2019s retention of control over the covered work. In&nbsp;<em>Mobile Infirmary<\/em>, the Alabama Supreme Court considered how to enforce a reciprocal indemnity clause in a situation where both the indemnitee and indemnitor were partially at fault. There, a hospital settled a wrongful death action brought by a former patient\u2019s estate. Believing that its laboratory management contractor was partially responsible, the hospital sought indemnification from the laboratory contractor under a reciprocal indemnity clause.&nbsp; Each of the reciprocal clauses required each party to indemnify the other party for third-party injuries arising from the indemnifying party\u2019s fault, but only \u201cto the extent\u201d that the underlying claim did not \u201carise from a [claim] for which\u201d the party seeking indemnification \u201c[was] required to provide indemnity\u201d under the other reciprocal clause. The Alabama Supreme Court affirmed the trial court\u2019s decision that the reciprocal clauses were unenforceable because they did not expressly provide for proportional liability. Rather, the court found the clauses ambiguous because when both parties were partially at fault, one could reasonably understand them to (1) permit \u201cindemnification back and forth ad infinitum,\u201d (2) \u201ccancel each other out,\u201d or (3) \u201crequire apportionment of fault.\u201d&nbsp;<\/p>\n\n\n\n<p>Although the use of reciprocal clauses is a tactic sometimes utilized in contract negotiations, contract drafters may be wary of such an approach when negotiating indemnity terms in Alabama. To address the contingency that both the indemnitee and indemnitor are both at fault, consider including explicit language requesting that liability be allocated based on the parties\u2019 proportionate share of fault or provide a formula that otherwise determines who pays whom and in what proportionate amount.\u00a0<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>J. Christopher Selman and Zachary B. Stewart | BuildSmart Hark! A recent Alabama Supreme Court indemnity decision,\u00a0Mobile Infirmary Association v. Quest Diagnostics Clinical Laboratories, may require you to retrieve your drafting pen. Although not a case involving a construction dispute,\u00a0Mobile Infirmary\u00a0does address a key component of risk shifting in construction contracts \u2014 the indemnity clause.&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/contractual-indemnity-construction-contract-key-drafting-considerations\/\">Continue reading <span class=\"screen-reader-text\">Alabama Supreme Court\u2019s Recent Ruling on Indemnity Clauses Could Impact Construction Contracts: Key Drafting Considerations<\/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":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224,9076],"class_list":["post-903450","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","tag-contractual-indemnity","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Alabama Supreme Court\u2019s Recent Ruling on Indemnity Clauses Could Impact Construction Contracts: Key Drafting Considerations - Advise &amp; 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