Originally posted 2018-10-03 11:07:55.
In 2010, the Virginia Supreme Court held in Uniwest Const., Inc. v. Amtech Elevator Servs., Inc., that Va. Code Sec. 11-4.1 renders completely void and unenforceable any indemnification provision in a construction contract between a contractor and subcontractor that seeks to indemnify the indemnified party from its own negligent acts. In short, the Virginia Supreme Court stated that such overly broad provisions violate Section 11-4.1.
A recent case out of the Eastern District of Virginia Federal District Court examined a provision in a contract between a designer/architect and a contractor or owner on a project. In Travelers Indem. Co. of Conn. v. Lessard Design Inc. the Court examined the application of Section 11-4.1 to the following provision of a design contract where Lessard, the indemnitor, agreed to:
[i]ndemnify, defend and hold the Owner, Owner’s Developer, and Owner’s and Owner’s Developer’s wholly owned affiliates and the agents, employees and officers of any of them harmless from and against any and all losses, liabilities, expenses, claims, fines and penalties, costs and expenses, including, but not limited to reasonable attorneys’ fees and court costs relating to the services performed by the Architect hereunder . . .
While this looks like a pretty simple matter where there is a high potential for violation of 11-4.1 given its terms, we all know that the courts in Virginia look at the plain language of a statute, and this one states:
Any provision contained in any contract relating to the construction, alteration, repair or maintenance of a building, structure or appurtenance thereto, including moving, demolition and excavation connected therewith, or any provision contained in any contract relating to the construction of projects other than buildings by which the contractor performing such work purports to indemnify or hold harmless another party to the contract against liability . . . caused by or resulting solely from the negligence of such other party or his agents or employees, is against public policy and is void and unenforceable. . .
Because Travelers argued that Lessard was a designer and not a “contractor,” that the design contract was not one “relating to construction” the Court had to look at the statute nd its purpose in analyzing whether this statute did in fact apply. The Court rejected Travelers’ attempted narrow reading of the statute. Specifically, it found that the contract required Lessard to perform certain construction phase related duties and therefore the contract was one that related to construction as required under the Code. Secondly, it held that the term “contractor” could, in certain circumstances, include architects or engineers so long as they were performing, managing or superintending construction. It found that the contract at issue required such performing, managing or superintending and for this reason and to implement the clear purpose of Section 11-4.1, the Court determined that Lessard fell within the scope of the statute as a “contractor.”
The Court did point out that this is a fact specific inquiry where the particular services of the architect are to be taken into account. For instance, an architect that merely provides design services, but does not provide owner representation or other construction related services, would likely not fall under the terms of this statute.
After determining that the statute did apply to Lessard, the Court examined the indeminification provision itself and found that it was general enough and broad enough in its “relaing to” language that it required Lessard to indemnify the Owner or contractor for their own negligent acts. The Court then applied the statute and Uniwest to wholly invalidate the provision. The result of this ruling was a dismissal of Travelers’ complaint and Travelers being unable to recoup the attorney fees and damages it paid ostensibly due to Lessard’s actions.
The takeaway? Contract drafting matters! As always, the terms of the contract will be applied as written and not as intended (if those two are not the same). Careful drafting of your indemnification provisions can avoid this type of result and consultation with an experienced construction attorney is a good way to assure that indemnification provisions are properly drafted to assure that the right person is paying for the problem.
Other thoughts? I’d love to hear them below.
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