I have spoken about Virginia Code 11-4.1 and the prohibition on forcing others to indemnify for the actions of the indemnitees on a few occasions here at Construction Law Musings (See Uniwest Posts). The Western District of Virginia gave its take on indemnification clauses and why they need to be carefully drafted in a December 2024 case, Sauer Construction, LLC v. MC3 Solutions, LLC et al.
In Sauer, the Court looked at, among other things, an indemnification provision between MC3, a subcontractor to Sauer, and MC3s sub-subcontractor, Bonitz Flooring Group. This was the relatively typical construction dispute where a general contractor sues a subcontractor and then that subcontractor sues its supplier and sub-subcontractors for indemnity pursuant to its contract. When faced with the indemnification claim, Bonitz argued that the indemnification provision violated the Va. Code 11-4.1 because it required Bonitz to indemnify MC3 for MC3’s actions. The provision follows the break.
The provision at issue was the following:
Contractor [MC3] shall not in any manner be liable for any loss, damage, or injury, direct or consequential and whether or not occasioned by inevitable accident, to property or person that may occur to or in relation to the work, not caused by its own misconduct, and Subcontractor [Bonitz] shall indemnify and hold Contractor harmless on account of any claim or claims with respect thereto which may be asserted against Contractor, provided, however, that in the event of any such claim Contractor shall at the expense of Subcontractor have the right to settle or defend any such claim through counsel selected by Contractor. Contractor shall have the right to require Subcontractor to furnish to Contractor an indemnity bond with surety satisfactory to Contractor, covering Subcontractor’s undertaking set forth in this paragraph.
The Court looked at this provision and the bolded language to determine if “misconduct” included “negligence” in order to decide if MC3’s negligence was in fact excluded from the indemnity. The Court found controlling authority that held that misconduct and negligence are not the same. It then looked at the plain meaning of misconduct and found it to refer to non-criminal intentional wrongful action. The court concluded that misconduct was at the very least ambiguous as to whether it included negligence and, applying the rule of construction that ambiguity be construed against the drafter, held that the provision was invalid because it did not exclude MC3’s negligence. I will also note that the contract referenced negligence in other indemnity contexts.
The takeaway? As always, be careful when drafting your construction contracts because every word may be parsed by a judge. Be sure that the words you use actually say what you mean them to say or you could be surprised later in court like MC3 was. Of course, the help of an experienced Virginia construction lawyer can help you avoid some of these pitfalls.
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