Monthly Archives: September 2015

A 2013 case from the 7th Circuit Court of Appeals demonstrates the importance of careful drafting and review of contracts.[1]  In that case, the plaintiff died while operating a boom lift for his employer; the employer had rented the lift from a rental company.  The plaintiff’s family brought suit against the rental company and the rental company sought indemnification from the employer pursuant to a clause in the rental agreement for the boom lift.  The indemnification provision read as follows: Indemnity. Customer [employer] agrees to indemnify and hold Company [rental company] harmless against any and all claims, demands, or suits (including costs of defense, attorney’s fees, expert witness fees, and all other costs of litigation) for any and all bodily injury, property damage, or any other damages or loss, regardless of whether such injury, damage or loss is caused in whole or in part by negligence, which arise out of, result from, or relate to the use, operation, condition or, presence of the equipment except where such injury, damage or loss is caused solely by the Company [rental company]. The rental company argued that this provision required that the employer indemnify them from the plaintiff’s claims of negligence. The Court, in reviewing other Indiana cases discussing similar provisions,[2] found that the employer’s obligation to indemnify the rental company for its own partial negligence was only implicit, not explicit as is required.  Therefore, the Court held, the employer did not “knowingly and willingly accept the burden of indemnifying [the rental company] for [its] own negligence.” This seemingly…

Although indemnification provisions are included in almost every engineering and construction contract, parties often overlook them, or merely copy and paste them between contracts.  Inattention to these provisions can result in catastrophic damages to an engineering firm, as Indiana courts place heavy reliance on the language the parties used in their contract.  The distinction between the duty to indemnify and the duty to defend and the ability to contract for indemnification of one’s own negligence is fraught with pitfalls for the careless drafter. The law of torts Under the law of “torts,” a person is responsible for the damage that they have caused.  In many cases, however, a plaintiff’s damages are caused by several different sources, which makes it difficult to allocate damages between defendants.  Instead of attempting to figure out which defendant caused which portion of the damage, the plaintiff can file suit against everyone involved.  Under Indiana’s Economic Loss Rule, a construction claimant with project damages is restricted to filing suit against the party with whom he or she had a contract.  The classic example of this is the case of the project owner suing the contractor and forcing the contractor to go after the subcontractors for damages that the contractor believes they caused. The law of indemnification Despite this “general” rule, the much more common scenario in the construction and engineering context is indemnification:  where one party, the indemnitor, compensates or agrees to compensate another party, the indemnitee, for loss or damage.  In the above scenario, the subcontractor may agree to indemnify the…